The Wall Street Journal - 21.03.2020 - 22.03.2020

B10| Saturday/Sunday, March 21 - 22, 2020 *** THE WALL STREET JOURNAL.

BYMARGOTPATRICK

ANDPATRICIAKOWSMANN

Regulators

Cut Banks

Slack on

Bad Loans

U.S. oil industry regulators
opened a dialogue with OPEC
in talks that could help foster
a truce between the world’s
three largest oil producers and

potentially resolve a Saudi-
Russian price war that has
devastated oil markets in re-
cent weeks, according to peo-
ple familiar with the matter.
Mohammed Barkindo, sec-
retary-general of the Organiza-
tion of the Petroleum Export-
ing Countries, spoke Friday
with Ryan Sitton, the Texas
railroad commissioner who
oversees the U.S.’s biggest oil
patch, these people said.
“Just got off the phone with
OPEC SG Moh[ammed] Bar-
kindo. Great conversation on
global supply and demand,”
Mr. Sitton said on Twitter.
“We all agree an international
deal must get done to ensure

BySummer Saidin

Dubai andBenoit

Fauconin London

notching their largest one-day

percentage gain on record on

Thursday.

Some think the swings

could mean prices have bot-

tomed out, at least for now.

“We now expect some wide

swinging choppy trade going

forward rather than the one

way ride south seen during

the past couple of weeks,” an-

alysts at Ritterbusch & Associ-

ates wrote in a Friday note.

U.S. crude prices are down

63% for the year, while Brent

has fallen 59%, leaving inves-

tors, U.S. government officials

and regulators weighing what

might stem the tide and help

producers weather the energy

sector’s latest storm.

Demand for crude has cra-

tered due to the coronavirus,

which has pummeled every-

thing from global manufactur-

ing activity to travel. Even

though gasoline prices have

fallen, consumers trapped at

home are in little position to

take advantage.

Elsewhere in energy mar-

kets, natural-gas futures pared

their Thursday gains, falling

3% to $1.604 per million Brit-

ish thermal units. Natural-gas

futures fell to their lowest lev-

els since 1995 on Wednesday,

weighed down by a reduction

of foreign demand for U.S. in-

dustrial exports such as lique-

fied natural gas and an ex-

pected drop in power

generation and demand as

businesses close.

U.S. crude prices posted
their largest weekly percent-
age decline in 29 years, with
Saudi Arabia and Russia
locked in a price war while the
coronavirus wreaks havoc on
oil demand around the world.
U.S. crude ended Friday
down 10.7% at $22.53 a barrel.
It closed the week with a mas-
sive 29%
slide, its big-
gest one-
week percentage decline since
January 1991. Brent, the global
gauge of prices, dropped 20%
for the week to $26.98.
The moves extended a week
of wild swings for oil. U.S.
crude slid below $30 a barrel
on Monday, continuing the
previous week’s rout after
Saudi Arabia said it would
ramp up output and slash
prices. On Wednesday, U.S.
crude futures plunged to their
lowest level in 18 years before

BYSARAHTOY

Oil Posts Largest Drop in Nearly Three Decades

U.S. crude prices are down 63% for the year, in part, because the coronavirus has cratered demand.

ANGUS MORDANT/REUTERS

Banking regulators in Eu-

rope said they would be flexi-

ble about how lenders account

for loans turning sour due to

the coronavirus crisis, to pro-

tect banks from burning

through capital because of de-

layed loan repayments.

The move is a relief for

lenders, who for days have

been lobbying regulators to

ease how they recognize poten-

tial losses on a new crop of un-

paid loans.

The Bank of England and

the European Central Bank on

Friday indicated banks should

consider the virus a temporary

shock and take government

support measures into account

when marking their loan books,

rather than taking a worst-case

view of its impact.

The ECB said that adding

regulatory flexibility will “al-

low banks to fully benefit from

guarantees and moratoriums

put in place by public authori-

ties to tackle the current dis-

tress.”

Banks and governments

across Europe have announced

relief packages for hard-hit

households and businesses, al-

lowing them to defer debt pay-

ments for a few months.

Some countries, starting

with Italy, have imposed a

moratorium on certain pay-

ment obligations, particularly

for mortgage owners and small

companies, to ease a liquidity

crunch they might be facing.

With many countries under a

lockdown, shops, restaurants

and other businesses have been

shut, but they still need to pay

bills and workers.

The ECB had already sig-

naled that it would provide

some flexibility to banks, in-

cluding on targets they cur-

rently have to meet on writing

down nonperforming loans.

Mr. Gifford has served as

vice chairman and CFO since

2018, and has worked for the

company for more than two

decades.

“We are committed to pro-

tecting the safety and well-be-

ing of our employees, contrac-

tors, their families and the

communities where we oper-

ate,” Mr. Gifford said in a

statement Thursday. “We take

the threat of Covid-19 seri-

ously and have been actively

implementing plans to mini-

mize business disruptions and

their potential impact to our

employees, consumers and

customers.”

Last week London-based

BT Group PLC, one of Eu-

rope’s largest telecommunica-

tions companies, said CEO

Philip Jansen tested positive

for coronavirus.

Mr. Jansen, 53, self-isolated

after his positive test. He said

his symptoms were mild and

he would continue to lead the

company, working remotely.

Altria GroupInc. Chairman

and Chief Executive Howard

Willard has contracted the

new coronavirus illness and is

taking a temporary medical

leave of absence, becoming

one of the first CEOs of a ma-

jor U.S. company to be hit by

the fast-spreading outbreak.

Finance Chief Billy Gifford

will assume authority and re-

sponsibilities for Mr. Willard,

56 years old, until he returns

from his leave of absence, the

company said.

The tobacco giant Thurs-

day announced a two-week

suspension of operations at

the Richmond, Va., manufac-

turing center where it makes

Marlboros after two employ-

ees tested positive for the vi-

rus.

The company said it has

enough cigarette inventory to

continue shipping at current

rates for about two months.

BYCHRISWACK

ANDJENNIFERMALONEY

Altria CEO Has Virus,

Will Take a Leave

Separately, the U.S. is con-

sidering other avenues to alle-

viate the pressure on Ameri-

can oil producers. The Trump

administration is considering

a diplomatic push to get the

Saudis to cut oil production in

tandem with threats of sanc-

tions on Russia, people famil-

iar with the matter said.

An output cut by U.S. pro-

ducers is unlikely to prompt a

swift resolution of the Saudi-

Russian spat, say Saudi offi-

cials.

In Russia, oil companies are

struggling with lower crude

prices. Many producers there

could begin hemorrhaging

cash if prices remain below

$30 a barrel.

Saudi Arabia won’t be able

to keep up its price war for

too long, say officials familiar

with the matter. The kingdom

has been forced to cut its bud-

get but needs benchmark oil

prices over $60 a barrel to

sustain an ambitious reform

program.

led OPEC and Russia were un-

able to reach a deal on reduc-

ing output in response to the

coronavirus pandemic. Mos-

cow decided to target U.S.

shale production with lower oil

prices but was taken aback by

Riyadh’s harsh response: price

cuts and production hikes that

triggered an oil-price collapse

below $30 a barrel.

A decision by American

producers to reduce output

would help the Kremlin claim

a victory and spur Russia to

resume talks with Saudi Ara-

bia, Saudi officials said.

Saudi officials expect Rus-

sia will ultimately return to

the table as lower crude prices

dent its economy, but only if it

can present the oil diplomacy

as a face-saving move, accord-

ing to officials in the kingdom.

A Saudi official said “the

perfect [scenario] would be

the U.S. giving their word over

this and that would make it

easier to convince everyone to

cooperate.”

are heavily in debt and produce

at a higher break-even price

compared with conventional

Russia and Saudi producers,

have been hit hard by the

slump. That has led in recent

days to stepped-up U.S. engage-

ment with OPEC—which Presi-

dent Trump has often accused

of anticompetitive behavior.

U.S. shale companies have

complained to Mr. Barkindo

about collapsing oil prices and

he has also spoken to Frank

Fannon, the senior State De-

partment official in charge of

energy matters, according to

Saudi officials.

Earlier this month, Saudi-

economic stability as we re-

cover from COVID-19.” The

Texas official said the OPEC

chief had invited him to the

next meeting of the organiza-

tion in June.

U.S. antitrust laws prevent

a formal deal and there is no

suggestion the two sides

would coordinate on produc-

tion decisions. But the Texas

regulator is considering cur-

tailing output in America’s

largest oil-producing state for

the first time in decades, peo-

ple familiar with the matter

have previously said.

Mr. Sitton said he would

gauge international reaction to

the idea of production cuts be-

fore deciding how to proceed.

“I’m not advocating for Texas

to do anything on its own,” he

said in an interview.

Meanwhile, Wayne Chris-

tian, the Texas commission’s

chairman, said he has a num-

ber of reservations about a

production curtailment.

Shale-oil companies, which

OPEC, U.S. Shale Officials Open Talks

The U.S. is hoping

to foster a truce to

resolve a Saudi-

Russian price war.

At Goldman, as at other big

banks, most of their compen-

sation is in the form of shares

whose value is tied to how the

bank performs over the next

few years.

The pay packages are likely

to rile employees who saw

their bonus checks shrink in

2019 as Goldman spent heav-

ily to build new businesses

like consumer banking and up-

grade its technology.

Revenue was flat and prof-

its fell to a four-year low, in

part because the bank socked

away an extra $1.1 billion in

legal reserves as it nears a

settlement with U.S. regula-

tors over its involvement in a

Malaysian corruption scandal.

JPMorgan Chase & Co. gave

CEO James Dimon, the high-

est-paid bank chief, a 1.6%

raise to $31.5 million. Gold-

man’s close rival, Morgan

Stanley, cut the pay of CEO

James Gorman 7% despite re-

cord annual revenue.

Goldman Sachs Group Inc.

Chief Executive David Solo-

mon got a 19% raise in 2019, a

message likely to resonate

poorly among traders and

bankers who saw their own

bonuses cut and who are fac-

ing a long period of economic

uncertainty.

Mr. Solomon earned $24.7

million in 2019, the bank said

Friday, including a $7.7 million

cash bonus and almost $15

million in stock. That is up

from $20.7 million the year

before, most of which he spent

as CEO-in-waiting, and makes

him Goldman’s best-paid chief

since Lloyd Blankfein took

home $41 million in 2008.

His top lieutenants also re-

ceived pay bumps.

John Waldron, the banks’

president and chief operating

officer, was paid $22 million

and finance chief Stephen

Scherr received $20 million.

BYLIZHOFFMAN

Goldman Sachs Chief Gets

A Raise After Rocky Year

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