LONDON, March 7 (Reuters) - Britain's banks are unlikely
to need a bespoke buffer of capital to cover fallout from
climate change given the lengthy time frame involved, Bank of
England Deputy Governor Sam Woods said on Tuesday.
Regulators globally are debating whether an extra capital
buffer is needed as banks face climate challenges such as
increased flooding hitting mortgaged properties.
"There might be a question that in order to capture climate
risks... might you need a new slab of capital to deal with
climate risks?" Woods told parliament's Treasury Select
Committee.
"I have become more sceptical about that proposition through
time," Woods said.
The BoE's climate-related testing of banks in May last year
showed that fallout from climate change on banks would manifest
itself over a long period of time, making it more of a "pay as
you go" rather than capital upfront type of risk, Woods said.
Data to quantify the risks will also improve, he said.
"We will expect people to be able to capture these primary
effects in a very granular way," Woods said, adding this casts
doubt on whether banks will face a big hike in their capital
requirements due to climate.
The BoE will set out its thoughts on climate risks in a
paper shortly, Woods said.
(Reporting by Huw Jones; Editing by Sharon Singleton)
Messaging: huw.jones.thomsonreuters.com@reuters.net))
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