Swiss crude oil refiner Petroplus has temporarily halted operations at three of its five European refineries after the company’s banks refused to extend the $1 billion credit facility Petroplus uses to buy crude oil. The three closed refineries are located in Belgium, Switzerland, and France. The other two, in the UK and Germany, are not scheduled to close at this time.
A consortium of 13 banks, including Morgan Stanley (NYSE: MS), BNP Paribas, Credit Suisse Group (NYSE: CS), and Deutsche Bank (NYSE: DB), froze Petroplus’s credit even though the banks allowed the company to breach covenants on its facility just two months ago without enforcing a penalty on the refiner. There is some speculation that increased capital reserve requirements have lead to the banks’ action, but more likely is that Petroplus has as yet undisclosed problems that led the banks to pull the plug on credit.
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