Skip to content

ECB Climate Test Goes Easier On Bank Trading Books Than Feared

  • ECB to test trading-book resilience to losses on bonds, stocks
  • Securities tied to mining, fossil fuels seen as most at risk

European banks are finally getting a look at the unprecedented climate stress test their trading operations will face this year, and it’s not as stark as some of them anticipated.

This month, the European Central Bank sent banks details of the landmark test, including on how their trading books would handle a 50% drop in mining stocks over three years and a surge in fossil fuel companies’ credit spreads, according to people briefed on the scenarios. But some lenders and their advisers had braced for severe moves across a wide swath of industries beyond the most polluting sectors, said the people.