UPDATE 1-Bank of Montreal CEO says fossil fuel divestment not a ‘productive solution’ – Reuters

UPDATE 1-Bank of Montreal CEO says fossil fuel divestment not a ‘productive solution’  Reuters

(Adds details of oil price declines, context, additional comments)

By Nichola Saminather

TORONTO, March 31 (Reuters) – Divesting from the fossil fuel industry is not a productive solution to climate concerns and collapsing energy prices, according to Bank of Montreal , which is working with oil and gas clients on a case-by-case basis, its chief executive said on Tuesday.

“We have the particular, almost idiosyncratic, confluence of supply shock and demand shock at the same time, which has impacted the commodity price,” CEO Darryl White said during the bank’s annual shareholder meeting, which was held in a virtual format due to the coronavirus outbreak.

Canadian banks have grown their oil and gas loan books faster than total lending in recent quarters, with Bank of Montreal among those leading the growth. BMO acquired $3 billion of energy loans from Deutsche Bank in 2018.

An oil price war between Saudi Arabia and Russia, combined with declining demand due to the coronavirus pandemic, has caused a glut and sent prices into a tailspin.

Some U.S. crude oil was valued at around $10 a barrel, while Western Canadian Select was at $7 on Tuesday.

BMO shareholder Harrington Investments called for the bank to assess “incongruities” between its stated sustainability goals and its C$56 billion of fossil fuel financing between 2016 to 2018.

The proposal was defeated, with the board stating that the transition to a more sustainable future must take into account the need to meet current energy needs.

“We are engaging with our energy clients to navigate the transition overall to a lower carbon economy in a way that accounts for the socio-economic impacts and energy needs of today while addressing the needs of the planet for tomorrow,” White said during the meeting.

White also reassured investors that, while the banking regulator expects banks to refrain from dividend increases, the lender does not foresee a need to cut payouts.

The bank has not laid off any employees as result of the coronavirus outbreak, and does not anticipate having to do so, he said.

Separately, TD Bank Chief Executive Bharat Masrani also assured employees there would be no job losses at the lender as a result of the outbreak. He added that the bank will “also find new ways to help transition and evolve” roles as needed.

Royal Bank of Canada’s chief executive told employees on Monday the lender will not cut jobs in 2020 due to the pandemic. (Reporting By Nichola Saminather Editing by Denny Thomas and Paul Simao)

Source: reuters.com

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