Bank shares drop on LyondellBasell exposure

The fallout from the Lyondell bankruptcy continues to grow. One analyst has suggested Swiss bank UBS has exposure of $500m – $1.5bn. Other banks, including Citi and the UK’s RBS, also have large exposures. Writing-off these debts will in turn reduce the banks’ own capital. And so it will further reduce overall credit availability.
Meanwhile yesterday’s bankruptcy court hearings in New York ran until after midnight, as creditors, lenders and the company negotiated on funding needs. Eventually an interim $2bn interim loan was approved, plus a $100m “super emergency loan” which will be used to fund Lyondell for the next 2 days.
Lyondell’s next objective is to finalise an $8bn ‘debtor in possession’ loan, which would enable it to keep operating in the medium term. But for the moment, it is very hand-to-mouth. Thus it also had to obtain the court’s approval to pay $8.1m of overdue wages to employees – Lyondell Chemical has 17000 employees worldwide, of whom 8000 are in the USA.

1 thought on “Bank shares drop on LyondellBasell exposure”

  1. LyondellBasell may be largest-ever bankruptcy

    The financial fallout from the Lyondell (LBI) bankruptcy continues, as the banks slowly begin to acknowledge their losses. According to Bloomberg, Len Blavatnik (Access Industries chairman) “didn’t put any of his firm’s money toward buying Lyondell”. B…

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