ECB to Scrutinize Banks’ Trading Books to Expose Climate Risk
- ECB climate tests to look at market risk as well as loan books
- Euro-zone banks face more detailed examination than peers
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The European Central Bank will look at the trading operations of major lenders as part of climate stress tests next year, after judging that an assessment of loan books alone won’t give enough insight into the fallout they face from global warming.
The ECB, which has yet to publicly disclose the parameters of its tests, will also study the reputational and operational risks banks face, Alvarez & Marsal, a consultancy firm that’s involved in the process, told Bloomberg.