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Banks Start Dropping Clients to Dodge Costs Tied to ESG Risk

  • EBA says it’s now seeing clear signs of deleveraging by banks
  • Banks that don’t cut their climate risk face capital add-on
Caltex Australia Ltd.'s Lytton Refinery

Photographer: Eric Taylor/Bloomberg

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European banks are beginning to drop clients that pose a climate risk rather than face the possibility of higher capital requirements, according to the watchdog overseeing the development. 

Banks are raising prices, denying loan requests, “de-selecting industries and in some cases clients,” said Jacob Gyntelberg, director of the economic and risk analysis department at the European Banking Authority.