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Banks Step Up Oil Sector Loan Reviews as Regulators See Risk

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U.S. banks are stepping up the frequency of credit reviews for oil producers as regulators flag the “emerging risk” from the precipitous decline in the commodity’s price over the past year.

Lending to oil and natural gas producers poses a bigger threat to U.S. banks than most other industrial sectors, said Bill Haas, deputy comptroller for midsize bank supervision at the Office of the Comptroller of the Currency, which regulates 1,620 national banks and thrifts. The OCC’s National Risk Committee in April put oil and gas lending near the top of its list of threats that warrant closer scrutiny, given the unpredictable swings in oil prices, he said.