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Europe Weighs Climate Risks in Test That May Hit Bank Dividends

European regulators are considering whether to make potential losses from climate change a regular part of bank stress tests, an approach that could weigh on the dividends lenders pay to investors, according to people familiar with the matter.

The European Banking Authority’s board of supervisors kicked off discussions this month on how to incorporate climate risks in the tests that take place every two years, said the people, who asked to remain anonymous. The deliberations have just begun, meaning climate would only be included in the 2025 examination at the earliest, they said.