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ECB Test of Bank Climate Risk Deals Softer Blow Than Feared (1)

July 6, 2022, 5:02 AM

Europe’s landmark test of banks’ resilience to global warming was far softer than many lenders had expected, according to people familiar with the matter.

Even the toughest hypothetical scenarios in the European Central Bank’s climate stress test didn’t result in losses that would make a meaningful dent in capital buffers, said officials at six big euro-area banks that took part. The ECB is due to publish aggregate results of the test on July 8.

Banks participating in the exercise had to estimate how events such as floods would impact mortgage values, or how big a hit they faced if corporate ...