CALGARY \u2014 Europe\u2019s largest bank, HSBC Holdings plc, will no longer finance new oilsands projects or pipelines, a move that could lead to increased borrowing costs for domestic players as European banks in scale back exposure to the sector.<\/p>\n
London-headquartered HSBC updated its policy for energy investment Friday, which now shows the lender will not provide financial services to new, greenfield oilsands projects or pipelines dedicated to the oilsands sector. It will also no longer fund new coal-fired power plants or drilling in the Arctic.<\/p>\n
While HSBC said it will continue to fund expansions of existing oilsands projects, environmentalists quickly likened the new policy to similar announcements by Paris-based BNP Paribas and Amsterdam-based ING Group, which said last year they would no longer participate in the sector.<\/p>\n
\u201cCanada is a priority growth market for HSBC \u2014 we have been here for close to 40 years and we\u2019ve invested $200 million here in the last two years alone,\u201d HSBC Bank Canada president Sandra Stuart said in an emailed statement.<\/p>\n
\u201cAt the same time, we are committed to doing our part in supporting the transition to a low-carbon economy,\u201d she said.<\/p>\n
Currently, HSBC has a loan book of $6.1 billion in the Canadian energy sector.<\/p>\n
By comparison, data from ARC Energy Research Institute shows $13.2 billion was re-invested in the oilsands sector during a difficult year in 2017, and $31.6 billion was re-invested in Canada\u2019s conventional oil and gas sector.<\/p>\n
Jason Vincent, president of Calgary-based Matco Financial, said he was surprised by the decision, as HSBC had been trying to gain a larger share of the Canadian energy financing market in recent years.<\/p>\n
\u201cThe view that we would have here is that the cost of capital goes up,\u201d Vincent said of HSBC\u2019s move, adding that oilsands are long-term, capital-intensive projects.<\/p>\n
Vincent said he expects other banks to move in and court oilsands companies as a result. \u201cIt\u2019s good business. It\u2019s long-term business,\u201d he said.<\/p>\n
At least one large Canadian bank took the opportunity to tout its investments in the oilsands.<\/p>\n
\u201cWe are proud to contribute to Canada\u2019s prosperity by financing environmentally and socially responsible energy projects,\u201d RBC Capital Markets spokesman Andrew Block said in an email.<\/p>\n
\u201cWe are committed to the safe development of resources and use a rigorous process to identify and assess potential environmental and social issues associated with the projects we finance,\u201d he said, adding the bank believes carbon pricing and investments in clean innovation will help Canada reduce its carbon emissions.<\/p>\n