Green bonds risk failing TLAC test

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The green revolution has left banks in a bind. On one hand they are under pressure from politicians – and a broad swath of consumers – to finance the shift to net-zero carbon. On the other, their funding instruments must follow strict rules to help soak up losses in the event the bank gets into distress.

The two obligations are not always mutually compatible.

Banks are already raising capital via green bonds, which contain features linked to sustainability targets. But regulators are worried

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