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UK banks exposure to CC

UK banks exposure to CC 9 June 2021

UK banks to reveal exposure to climate crisis for first time (via The Guardian)

By Kalyeena Makortoff

UK banks will for the first time be forced to reveal their exposure to the climate crisis, highlighting the risks that rising temperatures and sea levels could pose for the financial system, as part of the Bank of England’s climate stress tests this year.

The stress tests will put 19 banks and insurers through three climate scenarios, according to an update released on Tuesday, including one in which governments fail to take further steps to curb greenhouse gas emissions, resulting in average temperature increases of 3.3C and a 3.9–metre rise in sea levels. The central bank will be monitoring how those scenarios could affect potential loan losses, as customers default due to slowing growth and economic uncertainty.

However, the Bank of England will not identify individual businesses through the tests and will release only aggregate results for the banking and insurance sector, which will be published in May 2022.

The tests, which will look ahead 30 years, were planned for last year but were delayed due to the Covid outbreak. It meant that big lenders – including NatWest, Barclays, HSBC, Lloyds, Standard Chartered, the UK arm of Santander, Nationwide building society and Virgin Money UK – did not have to divert resources at the height of the pandemic, when they were expected to dole out billions of pounds in emergency Covid loans.

Read the full story here.