Thirteen EU banks face loan losses of more than 16% from green switch

Climate stress test predicts overall bank losses of 6%, rising to 11% under adverse scenarios

The European Union’s ‘Fit-for-55’ climate stress test showed that the financial system was broadly resilient to transition risk barring any shocks – but for 13 banks, the baseline scenario would result in losses on loan portfolios equal to more than 16% of their exposures in scope.

The stress test – which assesses the impact on the EU financial system from moving to a greener economy – found that the baseline scenario in which the EU’s climate targets are met with minimal disruption would result