[h=1]US banks face more pain despite crude?s rally[/h] Ben McLannahan and Ed Crooks in New York
The recent rally in the price of oil is doing little to improve the prospects of overstretched borrowers in the oil patch, say banks and their advisers, raising the prospect of
further pain for companies and their lenders in the months ahead.
Trouble in the energy sector was one of the themes of the first quarter for the big US banks, where
provisions for loan losses leapt an average 61 per cent from the same period a year earlier, according to DBRS, the credit rating agency.
Now, with many banks deep into the twice-annual process of resetting borrowing limits for their energy customers, they say they are
cutting facilities by between 20 and 25 per cent ? a deeper contraction than the 15 to 20 per cent cuts in the second half of last year.
The squeeze comes despite a recovery in the price of oil, which has risen more than 60 per cent from its February lows. It is likely to mean that more cash-strapped borrowers tip into bankruptcy....
