Monday, October 18

Santander’s Botin calls for central bank coordination on climate stress tests

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MADRID — Central banks need to be more coordinated on stress tests for lenders’ climate-related exposure to safeguard a level playing field for potential capital requirements, the chairman of Spain’s Santander, Ana Botin, said on Wednesday.

“We need coordination between central banks on stress tests because (otherwise) they would lead to (different) capital incentives,” Botin told a financial webinar in the run-up to the COP-26 climate summit.

“This is going to mean that more or less capital is going to go to certain areas or sectors and countries,” she said.

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The UN conference, meant to spur countries to make bigger commitments to slash greenhouse gas emissions, is due to start in Glasgow on Oct. 31.

“If we don’t have an alignment first on stress tests, second on what it means for capital requirements, you will have a lot of unintended consequences,” Botin said.

Botin said that it was “crucial to be aligned and we are not seeing that” while working with institutions such as the ECB, Britain’s Prudential Regulatory Authority, US Federal Reserve Bank, the Bank of Brazil and others.

“They are all doing things but at different stages,” she said.

European Central Bank supervisor Frank Elderson said last week that the ECB’s stress test of banks’ climate-related exposure next year would not automatically lead to higher capital requirements but could still force lenders to beef up their buffers.

(Reporting by Jesús Aguado; editing by Emma Pinedo, William Maclean)

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