LONDON: A group of US regional banks is ratcheting up lending to oil, gas and coal clients, grabbing market share as bigger European rivals back away.

The list of banks includes Citizens Financial Group Inc, BOK Financial Corp and Truist Securities Inc, according to data compiled by Bloomberg.

The companies have climbed between 13 and 40 steps up the league table for fossil-fuel lenders since the end of 2021, placing them among the world’s top 35 banks by number of deals.

Fifth Third Securities Inc and US Bancorp, already in the top 30, both ascended 10 steps in the same period.

Since the start of 2022, the combined number of fossil fuel loans provided by Citizens Financial, BOK Financial, Truist Securities, Fifth Third and US Bancorp has increased by more than 70% on an average annualised basis, compared with the preceding six years, the Bloomberg data showed.

Spokespeople for Truist, Fifth Third and US Bancorp declined to comment.

Rory Sheehan, a spokesperson for Citizens Financial, said the bank supports initiatives enabling the transition towards a lower-carbon future.

He also said the bank recognises the role of the oil and gas industry.

The development offers a glimpse of how the US banking landscape is being altered against a backdrop of stricter climate regulations across the Atlantic.

US regional lenders, shaken by the crisis that followed Silicon Valley Bank’s meltdown, are participating in more fossil fuel loans as banks in Europe begin to pull away for fear of getting caught on the wrong side of environmental, social and governance (ESG) regulations and climate litigation.

“Someone betting heavily that the demand for fossil fuels will keep on rising significantly is clearly taking a view that is at odds with existing forecasts,” said Jean Boissinot, head of the secretariat for the Network for Greening the Financial System, which is hosted at the Banque de France and includes officials from the world’s central banks.

“I would like to be very sure that they understand the implications of this kind of bet.”

BNP Paribas SA, the European Union’s biggest bank, and ING Groep NV, the largest lender in the Netherlands, are among the banks that are in the process of expanding restrictions on fossil-fuel clients.

The companies, which are both currently fighting lawsuits brought by climate nonprofits, dropped about 10 places in the ranking of oil, gas and coal lenders over the past two years.

Wall Street’s largest banks, meanwhile, remain among the absolute biggest lenders to the fossil-fuel industry.

Last year, such loans were dominated by Wells Fargo & Co, Bank of America Corp and JPMorgan Chase & Co, according to Bloomberg data.

Some of the US regional banks stepping up oil, gas and coal lending are based in states that have either passed or are reviewing anti-ESG laws.

In Oklahoma, which enforced its Energy Discrimination Elimination Act in late 2022, local bank BOK Financial recently soared up the league table to become one of the world’s 30 busiest dealmakers in fossil fuels.

Marisol Salazar, senior vice-president and manager for energy banking at BOK Financial, said the bank is now seeing “many more opportunities” in the fossil fuel industry.

“We’re not just picking up customers,” she said. “We’re also picking up talent, we’re picking up engineers, we’re picking up investment bankers, we’re picking up experienced relationship managers.”

 - Bloomberg