Natixis plans shake-up to focus on greener lending

[LONDON] French bank Natixis will merge its commodities and infrastructure operations to focus on clean energy in a restructuring sources said was accelerated by a series of loss-making loans to oil traders.

The move by one of the most active banks in commodities lending highlights the struggles of businesses connected to a sector grappling with an oil price collapse, rising bankruptcies and growing pressure to switch attention to greener fuels.

"We are currently working on the creation of an Infrastructure & Energy Transition group in line with the Green Weighting Factor we have been implementing since the end of 2019," a Natixis spokesperson said on Thursday.

Natixis became the first European bank to introduce internal financial penalties last year through its Green Weighting Factor on deals that are not environmentally friendly.

Dominique Fraisse, the bank's global head of energy and natural resources, left the company recently to pursue other opportunities, the spokesperson said.

The restructuring will result in some of the 140 people from Fraisse's energy and natural resources team joining 100 people from the infrastructure unit, said three sources familiar with the restructuring. The remaining energy team employees will be part of a different division focused on short and medium-term trade finance, one of the sources said.

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Some jobs will be lost, the sources said, adding that it was too early to say how many people the new division will employ.

The decision to restructure was made before the coronavirus crisis but the plan was pushed forward after the bank booked a loss in the first quarter, the sources said.

Along with many of its peers, Natixis was hit by a series of defaults by Asian traders this year and the struggling US shale oil and gas industry, they added.

Natixis declined to comment on how restructuring will affect the existing workforce or on specific trading losses.

The bank set aside 193 million euros (S$306.2 million) in provisions for the first quarter and also made provisions in the previous quarter to cover loans made to US natural gas companies.

In its first quarter results, Natixis identified increased risk of fraud and poor performance of loans to Asian companies after the collapse in oil prices.

Natixis was also among lenders to Singapore-based oil trader Hin Leong, which went bust in April.

The bank also has credit outstanding with Asian agricultural trader Agritrade and oil traders ZenRock and Hontop Energy.

Natixis is also part of a consortium of banks behind a Glencore oil pre-payment deal with Congo Republic, which has defaulted on the loan for more than a year.

REUTERS