RBS Still Mired In Tar Sands

Written by Brant Olson

Topics: Finance, Oil

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RBS out of the tar sands!Last Summer we had a rather public row with RBS over its role in bankrolling fossil fuel expansion. Since then, the Bank’s PR team has been working overtime to clear the bank’s name — even releasing a 10-page report dedicated to the topic. Trouble is, its bankers continue to close lucrative deals in the tar sands — even opening a shiny new office in Calgary.

Those bankers have been busy. All told, RBS has raised more than $9.2 billion for companies operating in the tar sands since it was bailed out by British taxpayers in 2008. More than $2 billion of that total was raised just in the last six months since the bank produced it’s glossy report.

Let’s look into the deals RBS brokered in the last six months:

  • Enbridge: $ 100 Million

A proposed massive new pipeline from the tar sands through the heart of the Great Bear Rainforest to a tanker port on the coast of British Columbia. RBS ran the books together with RBC, HSBC and Deutsche Bank on a $400 million bond issued by Enbridge last Septemeber. Each bank earned an estimated $87.5 million on the deal.

  • Kinder Morgan: $275 Million

A proposed a competing West-Coast pipeline through the Great Bear Rainforest. This one from the tar sands to a tanker port near Vancouver, BC. RBS led the bond deal in February.

  • BP: $950 million

Partnered with Husky to build a $2 billion tar sands strip mine forced-steam drilling project. And don’t forget the Gulf Spill. RBS managed two giant bond deals for BP in October and March.

  • Statoil: $150 Million

RBS issued a revolving credit facility (think credit card) to Norway’s state-owned oil company last December. Last month Norway’s government paved the way for increasing Statoil’s already substantial tar sands stake.

  • Total: $400 Million

French Oil company building a massive new tar sands strip mine. CEO says tar sands are the future: ‘”To justify our massive investments in the oil sands, we’re looking at what the world will look like in 2020, 2025 or 2030,” he told a reporter in 2009. RBS led the bond deal in January.

  • Marathon: $600 Million

The midwest oil refiner spent $2.2 billion to retool it’s Detroit refinery to take more tar sands. Meanwhile, its neighbors are worried about more asthma and cancer. RBS led the bond deal in January.

Was RBS alone in supporting these businesses? No. Many banks were involved.

Do these companies do more than develop the tar sands? Yes they do.

But is RBS any less culpable for using taxpayer money to finance tar sands? No it is not. Follow the Indigenous activists making that case at the Bank’s shareholder meeting this week.

*A note on numbers. All the numbers quoted here are pulled from Bloomberg, which ranks banks according to the value of deals they lead in a particular sector.  These numbers are the value of those deals, not the value of RBS ownership or interest in those securities.

2 Comments For This Post I'd Love to Hear Yours!

  1. HL says:

    Banks are probably the wrong target for this. Canada is a democracy and the government is letting this happen… why aren’t they a target? I’m sure that a little bit of tar sands oil goes into our cars everytime we fill up! Aren’t we all culprits?

    The reality is that banks are capital allocators – they only lend money to Oil companies as long as people are willing to pay for the oil. I’m sure that in many people’s ideal worlds RBS and other banks will simply stop lending to fossil fuel companies altogether, but lets be realistic here – this won’t happen unless people stop driving cars. Seems like a waste of time to attack the effect of oil dependence, rather than the cause.

    Interestingly enough, bank investment allows companies to invest in research and development. If you look at the investment mixes of many of the large energy companies, there is a steady shift towards renewable generation in all of them (though from a small base). I’m not suggesting that there will be an overnight switch by the big energy firms if bank’s lend them money, but starving them of credit will just slow the process down, not speed it up?

    Of course you could say that the bank should just outright refuse to lend to fossil fuel companies! At the same time, maybe we should all stop using the oil that they produce? Lets take a good look at ourselves and target the cause of oil dependency, not the product.

  2. Brant Olson says:

    Thanks for your feedback HL. Our experience is that corporate power–that of the fossil fuel and banking industries in particular–is an obstacle to well-functioning democratic institutions. This is certainly the case in Canada, where the Harper Administration is squarely in the pocket of tar sands developers despite wide margins of Canadians opposed to tar sands expansion.

    My take is that we need pressure from all sides. In the parliament, in the courts, on Wall Street, on Main Street–everywhere. We all need to find a way to make a difference, and this is the way we’ve chosen.

Trackbacks For This Post

  1. RBS oil sands investments ‘not sound’, say greens | Damian Carrington – Marcus Evans Offices

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