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Bank of Montreal (BMO) signage was displayed on a building in the financial district of Toronto, Ontario, Canada on Thursday, July 25, 2019. Canadian stocks fell as tech heavyweights Shopify Inc. weighed on the benchmark and investors they continued to flee from the grass companies.
Photographer: Brent Lewin / Bloomberg
Photographer: Brent Lewin / Bloomberg
The Bank of Montreal is closing its oil and gas investment banking business in the US and will focus on business in Canada in the future, becoming the latest financial institution to cut ties to the besieged shale industry in the US.
BMO said it has made “the financial decision for an orderly liquidation of our non-Canadian investments and corporate banking activities in the energy sector.” Going forward, the company said via email, its capital markets energy business will be focused on Canada.
The company is eliminating about 50 positions in its investment banking group as part of the exit announced to staff on Monday, according to a person familiar with the situation who asked not to be identified because the information is not public. A handful of corporate bankers will manage BMO’s US oil and gas loan portfolio, the person said.
BMO is the latest bank to stop investment banking linked to US oil and gas explorers, who even before the pandemic were under pressure after years of meager returns. The move does not appear to be related to the ESG concerns plaguing fossil fuel companies. The US shale industry has been overwhelmed by a wave of consolidation in recent months as the pandemic has reduced oil demand, dragged prices and forced low-price mergers. This follows years of poor M&A activity in the oil zone.
Read more: Negative energy loans double in three months, Canadian banks say
US oil and gas loan from BMO the book was approximately $ 5.4 billion (C $ 7 billion) as of July 31, representing half of its total oil and gas loans, according to a company presentation.
For ESG data on BMO, click here.
– With the assistance of Derek Decloet
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