19 November 2017

Regional Banks Tip-Toe Into Commodities

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Two years ago, Denver-based oil and gas driller Bonanza Creek Energy wanted to spread its credit risk and hedge its production - and it called on some regional Main Street banks to help do it.

It ended up with a group of banks, including several names little-known in commodity circles until recently. Ohio-based KeyCorp led the lenders and was also among the banks providing hedging.

Traditionally, Wall Street's big banks were the go-to providers of such services, but since the financial crisis and the introduction of tougher regulations, they have been pulling back.

At the same time, regional banks, more used to serving consumers and small and medium-sized businesses in the communities they serve, have been growing their energy and commodity lending and hedging businesses. Soaring U.S. oil and gas production resulting from the use of fracking technology in states such as North Dakota has encouraged the regional banks.

Click here for the full article from Reuters.

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