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Sour Oil Loans for Banks Is a Much Bigger Headache Than You Think

Don't let the rebound in oil prices fool you. Banks are setting aside billions of dollars to cope with sour oil and gas loans.

"I think it's a big concern," said Ian Winer, head of equity trading at Wedbush Securities, based in Los Angeles. "The biggest issue is I'm not sure anyone really knows how much exposure is out there."

Wells Fargo (WFC - Get Report) has $17.8 billion worth of oil and gas loans, representing only 1.9% of its total loans, according to its first-quarter earnings report released Thursday.

"While substantially all of the loan portfolio continues to perform well, the oil and gas portfolio remains under significant stress due to low prices and excess leverage in this industry," said Mike Loughlin, Wells Fargo chief risk officer, in a Thursday statement.

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