RBS slashes backing of oil and gas companies

Provisions made to the UK renewable sector now stand at £1bn a year, data published by The Guardian newspaper shows.

The figures suggest a significant and historic shift for the lender, which is still 73 per cent state-owned, as until recently it was one of the world’s biggest financiers of fossil fuels.

The RBS figures show its global exposure to oil and gas in 2015 fell 70 per cent compared with 2014, down from £22bn to £6.6bn, with exposure to mining and metals, which includes coal, also falling, from £4.7bn to £2.1bn.

The proportion of the bank’s global structured financing – used to fund major projects – also changed, with renewable energy projects accounting for more than 90 per cent in 2015, up from 67 per cent in 2014. In the UK, 100 per cent of the structured financing went to green energy projects. Overall sustainable energy lending doubled in 2015 to £1bn, which according to data from business intelligence firm, InfraDeals made RBS the largest lender to the UK renewable energy sector.

The bank is in the midst of a strategic realignment and charm offensive having been at the centre of numerous banking scandals over recent years and the move away from backing fossil fuels may be seen as a part of this drive, having previously been repeatedly targeted by climate change campaigners.

The figures largely show a withdrawal from North American and Asian markets as part of chief executive Ross McEwan’s strategic retreat to the bank’s core UK business.

From the start of April, it ended all business in Canada, where it was a significant funder of the heavily polluting tar sands projects.

RBS said it was guided by environmental risks and would not finance any new tar sands projects.

In December the bank ended its lending to mining companies whose sole focus is coal.

However, the reduction also comes amid a global slump in the oil and coal sectors, and declining investment by most financial institutions.

Whether the shift is driven by commercial or environmental considerations is only likely to be known should traditional energy markets recover.

An RBS statement on the figures said: “We are supporting customers in carbon-intensive industries to diversify and move away from the most high-impact activities. We will work with them to try and achieve this, but where the impacts are too high, we have proved we are prepared to withdraw our support.”

Luke Sussams, senior analyst at the finance thinktank Carbon Tracker, said: “It is encouraging that financial institutions are beginning to understand the risks posed to fossil fuels by the low-carbon transition. The true litmus test, however, will be if RBS holds to this lending trend if the crude oil price rebounds in the short term.”