Connect with us

Global Banking and Finance Review is an online platform offering news, analysis, and opinion on the latest trends, developments, and innovations in the banking and finance industry worldwide. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website. .

Banking

Change bank capital rules to boost climate action – survey

Published : , on

By Simon Jessop

LONDON (Reuters) – An overhaul of bank capital rules would be the most effective step regulators could take to support climate action, a group of 50 sustainable finance experts said on Tuesday.

In a survey carried out by the non-profit Climate Safe Lending Network, academics, commercial banks, investors, non-governmental organisations and central banks were asked to rank 10 proposals for how financial regulation could be changed to boost climate efforts.

Respondents included the Bank of England, the European Central Bank and Spain’s BBVA, as well as Boston Common Asset Management and Amalgamated Bank in the United States, and the UK’s Big Society Capital.

The proposal drawing the most support was for regulators to impose tougher rules around the amount of capital banks need to keep as a buffer if they want to lend to companies responsible for emitting high levels of greenhouse gases.

At the moment, banks can lend to fossil fuel companies relatively cheaply because the risk-weights applied to the lending do not take into account the systemic risks of doing so, the report said.

By making it more expensive to lend to these companies, banks would lower their exposure to the risk, build up capital buffers to absorb potential losses from any loan defaults and focus investment on other parts of the economy.

On a scale of 1 to 5 assessing the potential impact of the policy proposal, with 5 the highest, the survey respondents rated it 4.13. The feasibility of its implementation was rated 0.3 on a scale of minus 1 to plus 1, with plus 1 most feasible.

“Stranded assets create a credit risk that is not captured by the current framework,” said Andrew Turvey, prudential risk director at Belmont Green Finance Limited.

Sarah Breeden, executive director for UK deposit takers supervision at the Bank of England, however, said more clarity was needed on the path of forward climate policy for the option to be more feasible.

“We would have better sight on how risks might arise and more data to support policy change,” she said.

The next most backed proposal was for regulators to set out a clear framework for what it means to be compliant with reaching net-zero emissions by mid-century, and in line with the goals of the Paris climate agreement.

“This is the type of guidance that could be a game changer,” said Lauren Compere, managing director of Boston Common Asset Management. The proposal was ranked 4.0 on potential impact and 0.3 on feasibility.

(Reporting by Simon Jessop; Editing by Kirsten Donovan)

Global Banking & Finance Review

 

Why waste money on news and opinions when you can access them for free?

Take advantage of our newsletter subscription and stay informed on the go!


By submitting this form, you are consenting to receive marketing emails from: . You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

Recent Post