Status: 03/31/2023 08:15 a.m
Climate protection is also becoming increasingly important in the financial sector. Banks are now carefully considering which business models to finance with loans. “The greener, the better” is the motto.
The conversion of the economy to climate neutrality has reached the banks. They are not only trying to measure and reduce their own CO2 emissions. As intermediaries between investors and borrowers, banks are completely reorganizing their business to finance better climate protection.
Greenhouse gas emissions as a risk factor
Regional banks and savings banks are also affected by climate change in their business, said Christian Elbers from the Federal Financial Supervisory Authority BaFin at a symposium of the “Handelsblatt” in Frankfurt am Main. In the medium term, significant effects of climate change are to be expected, especially in eastern and south-western Germany. This has consequences for the financing of numerous sectors, starting with agriculture.
Financing companies that cause a lot of CO2 are becoming increasingly risky, reported the head of banking supervision at the Bundesbank, Karlheinz Walch. He presented a study according to which the risk is between 1.4 and 2.4 times higher than loans to other companies.
Very few customers are sorted out
Credits should by no means be canceled for CO2-intensive industries, said Commerzbank’s risk director, Marcus Chromik. Rather, it is important to finance companies that are converting to climate neutrality. Basically, the transformation of the economy is affordable. “The topic comes up in every customer conversation,” said Chromik. “If someone didn’t hear the shot, that means we’re going down there.”
Asked about the number of customers who had been sorted out because of “climate ignorance”, the Commerzbank board member said: “Your fingers are enough.” Torsten Jäger from the Federal Association of Private Banks confirmed: “I can’t throw out all customers and only finance the Greens.”
Climate requirements of the banking supervisory authority
The risks from business models that burden the climate are analyzed broadly. Banks fear that old industries are making less and less money to pay off loans. At the same time, investors will hardly be willing to give their money to banks that finance climate-damaging companies. In addition to these business reasons, there are regulations of the state banking supervision. She is demanding more and more climate-neutral business.
The representatives of the banks criticized too much attention to detail in state regulations. This not only applies to controlling the effects on the climate, but to banking supervision as a whole. The CFO of DZ-Bank, Ulrike Brouzi, named 14 key figures that had to be calculated. “Every single key figure is great,” said Brouzi. But in the combination it becomes completely confusing. “That’s when mathematicians get excited,” added the qualified mathematician ironically.
Conversely, supervisor Elbers from BaFin accused the banks of a lack of clarity. When it comes to climate risks, there is sometimes actionism: “There is very small-scale control,” said Elbers, “any activities are excluded without there being a strategy behind them.”
Europe better prepared to face risks
Banks, lobbyists and regulators agreed that the industry in Europe is much more stable and that supervision is far more extensive than in the United States. The settlement of Credit Suisse has shown that crises are dealt with far better and faster than in the banking crisis of 2008, said DZ Bank board member Brouzi. “The banking sector is resilient,” confirmed Bundesbanker Walch. He warned to write off loss-making securities at times. Banks should “constantly deal with reality,” says Walch. This indicates that hidden burdens from the turnaround in interest rates are building up in the balance sheets of individual German banks.
BaFin Executive Director Raimund Röseler pointed out that not only bank management and banking supervision bear responsibility: “I expect that professional investors will finally read the prospectuses of the products they buy.”
The head of banking supervision at the European Central Bank, Andrea Enria, was alarmed by the fall in German bank shares last Friday. With a few million investment in credit default insurance, stock prices of large banks could be drastically influenced. One does not know who is acting there. The supervisors will take a close look at that, announced Enria.