Lionel Laurent is a Bloomberg Gadfly columnist covering finance and markets. He previously worked at Reuters and Forbes.

(Updated )

The slump in oil should be a blessing for European consumers in need of a spending boost -- but for the region's banks it's proving a curse as investors fret about the possibility of a wave of losses on loans to the energy industry.

Bank Pain
European bank stocks have tumbled over the past year
Source: Bloomberg data

After a fourth-quarter results season that saw U.S. banks such as Citigroup and JPMorgan Chase set aside more than $2 billion between them to cover souring energy loans and raise the prospect of more to follow if oil remains near $30 a barrel, European lenders are waking up to the need to lift the veil on their own exposures.

Given the region's banks have stubbornly under-performed both the broader European market and are also trading at a discount to their book value, it's a step that makes sense. But the data disclosed so far are opaque and vary widely from bank to bank.

France's banks, which have long used their profitable consumer banking operations to fund expansion in corporate lending, are among the most exposed to the oil and gas industry.

Falling Crude
Oil has tumbled, sparking concern about banks' lending to companies in the industry
Source: Bloomberg data

Estimates of their exposure vary. Jonathan Tyce of Bloomberg Intelligence puts their total exposure to oil and gas at more than 100 billion euros ($112 billion). Credit Agricole, BNP Paribas, Societe Generale and Natixis are in the top seven European lenders with exposure to energy companies and in the top five for metals and mining companies, according to analysts at Nomura.

Some Europeans, such as Natixis, have recently played down the need for extra provisions, citing their own stress tests. But unlike their U.S. counterparts, European firms haven't set out the financial hit they could take if oil doesn't budge.

When they report earnings, France's banks have an opportunity to give reassurance.

Oil Slick
French banks' exposures to oil as a proportion of total lending
Source: Bloomberg Intelligence
Figures are for the third quarter of 2015

BNP Paribas appears to have flunked that chance: on Friday, it failed to match the kind of transparency seen at U.S. counterparts. The bank said it had a 25.6 billion-euro exposure to oil and gas net of guarantees and provisions. It didn't give estimates of any future financial impact from a prolonged fall in the price of oil, saying only that most of the exposure was investment grade and that there was "good coverage" via collateral of non-investment-grade loans.

Too little is still known about what types of collateral the banks have, what hedges they have and how they view the quality of their borrowers. European banks need to take a more uniform approach -- because the current disclosure doesn't help back up the banks' claim this is a wholly manageable issue.

ING on Thursday offered some clarity on its 29 billion-euro energy loan portfolio -- which accounts for about 14 percent of total lending to companies.

ING's Oil and Gas Lending
Bank says it's at risk of loan losses on only 3.8 billion euros of loans to the industry
Source: company filings

The Dutch bank expects to make provisions on 3.8 billion euros of loans if oil prices remain at current levels. It classified other parts of the loan book as "somewhat exposed" to oil price risk.

While it's sensible to differentiate a loan to a commodity trader, say, over a U.S. oil producer, ING's criteria are unclear and help explain why investors view banks as being too reactive rather than proactive in booking provisions. Analysts at KBC Securities raised the possibility the figures may be flattered by some forbearance and foot-dragging on markdowns.

Others are worse: Deutsche Bank didn't disclose its exposure to the energy industry, saying only it was "underweight" relative to the sector.

Credit Suisse said on Thursday its net loans to the oil and gas industry totalled $9.1 billion -- the biggest chunk of which is tied up in oil explorers and producers. Unlike ING, it didn't give any outlook for provisions.

A standardized approach to breaking down the creditworthiness of borrowers, the types of collateral used and the financial provisions that might be taken in specific scenarios would be a big help if Europe's banks are to claw back some of the discount investors are putting on them.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

(Updates with BNP Paribas' disclosures in eighth paragraph)

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Lionel Laurent in London at

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