BNP Paribas to sell $11-bn energy loan portfolio: report

BNP Paribas, the largest bank in France by assets, is planning to sell up to $11 billion of its portfolio of loans to oil and gas companies and is talking to at least three potential buyers, the Financial Times today reported, citing people with knowledge of the situation.

BNP Paribas was in talks with at least three potential buyers for selling the energy portfolio as the Paris-based bank plans to reduce its balance sheet by about 10 per cent or €70 billion ($92 billion), before the end of 2012.

The portfolio contains loans with a face value of about $11 billion, of which only $4 billion has been drawn by the borrowers, the report said. Large US and Canadian banks are thought to be the most logical acquirers of the assets, one of the people told the paper.

BNP is not quitting the global energy business altogether and was committed to lending to strategic clients in the sector, but the loan portfolio being sold requires higher capital while yielding relatively low profit, including books of aircraft, shipping, infrastructure and trade finance.

Earlier this month, Reuters reported that BNP was to sell existing assets and cut lending in any currency other than the euro for the next 15 months as part of its plans to boost capital buffers and wean itself off frozen funding markets, citing the bank's internal document.