Bankers that backed the U.S. shale boom are setting aside more cash to cover souring loans as energy bankruptcies accelerate.
JPMorgan Chase reserved $550 million in 2015 to cover potential losses in its oil and gas portfolio, including $124 million added in the fourth quarter, Marianne Lake, the bank’s chief financial officer, said Thursday in a discussion with analysts about fourth quarter results.
BOK Financial Corp. said Wednesday that its provision for credit losses was expected to be $22.5 million, up from earlier forecasts of $2.5 million to $8.5 million.
“A bank is supposed to be there for clients in good times and in bad times,” Jamie Dimon, JPMorgan’s chief executive officer, said during the conference call. “So to the extent that we can responsibly support clients, we’re going to. And if we lose a little bit more money because of it, so be it.”
Never miss a local story.
Oil prices plunged 36 percent in the past year and dipped to a 12-year low this week, putting an end to the debt-fueled drilling spree that pushed U.S. oil production to the highest level in more than 40 years. After years of spending more than they made, shale companies have parked their drilling rigs and laid off thousands of workers in an effort to conserve cash.
In 2015, 42 oil and natural gas producers went bust owing more than $17 billion, according to the law firm Haynes & Boone LLP.
Both Wells Fargo and Citigroup will announce fourth-quarter financial results on Friday. Both lenders reserved additional cash for energy losses last year.