Fed to kick off climate scenario analysis in 2023 with six large banks




  • In Business
  • 2022-09-29 14:38:30Z
  • By Reuters
 

By Pete Schroeder

WASHINGTON (Reuters) - The Federal Reserve announced Thursday that six of the nation's largest banks would participate in a pilot climate scenario analysis exercise in 2023.

Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo will undergo the exercise, which the Fed said will not have capital or supervisory consequences. The Fed plans to publish aggregate findings from the exercise but no firm-specific information.

The exercise, which had been expected, will kick off the Fed's efforts to gauge the level and management of risks for banks when it comes to climate change, after European regulators already mounted similar efforts.

The potential effects of climate change - namely through rising sea levels, worsening floods and fires, and government policies transitioning away from carbon-heavy industry - could destroy trillions of dollars of assets around the globe.

In its announcement, the Fed emphasized the pilot exercise will be strictly for information-gathering purposes, calling it "exploratory in nature." The central bank specifically distinguished the upcoming exercise from its annual "stress tests" of bank finances, in which the Fed tests large banks' strength against hypothetical recessions and the results directly inform how much capital each firm must hold.

Fed Vice Chair for Supervision Michael Barr said earlier this month the central bank has an "important, but narrow" mandate to police climate risks for banks.

The Fed will provide "climate scenario narratives," which banks will use to analyze the impact on their portfolios and business strategies. The Fed will then review those findings with the firms to help them build up their ability to manage climate-related risks.

(Reporting by Pete Schroeder; Editing by Chizu Nomiyama)

COMMENTS

More Related News

Asian shares lower as strong data hit hopes for dovish Fed
Asian shares lower as strong data hit hopes for dovish Fed
  • US
  • 2022-12-06 07:47:29Z

Stocks were mostly lower in Asia on Tuesday after Wall Street pulled back as surprisingly strong economic reports highlighted the difficulty of the Federal...

Exclusive-Goldman Sachs on hunt for bargain crypto firms after FTX fiasco
Exclusive-Goldman Sachs on hunt for bargain crypto firms after FTX fiasco

Goldman Sachs plans to spend tens of millions of dollars to buy or invest in crypto companies after the collapse of the FTX exchange hit valuations and...

Bargains begin luring big banks back to China bets for 2023
Bargains begin luring big banks back to China bets for 2023

HONG KONG (Reuters) -As Chinese assets whipsaw around hopes and fears over the country's path out of the pandemic, big offshore investors are slowly leaving ...

Bank of America Corporation
Bank of America Corporation's (NYSE:BAC) recent 4.3% pullback adds to one-year year losses, institutional owners may take drastic measures

To get a sense of who is truly in control of Bank of America Corporation ( NYSE:BAC ), it is important to understand...

Goldman Sachs Warns Traders Of Shrinking Bonus Pool Even As Trading Revenue Rises
Goldman Sachs Warns Traders Of Shrinking Bonus Pool Even As Trading Revenue Rises

Leading global investment bank Goldman Sachs Group Inc (NYSE: GS) recently announced a shrinking year-end bonus for traders, despite seeing its trading...

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

  • Happy wheels
    (2022-09-30 03:52:32Z)

    I am extremely impressed with your work; the material provided is thorough and simple to comprehend. I'll be checking in on your next post on a frequent basis.

    REPLY

Top News: Business