The European Banking Authority (EBA), the EU agency that supervises the banking sector, published this Friday an analysis on the situation of entities on the continent where it focuses on the risks that impact institutions. financial. And, among them, the climate crises and DANA stand out.
“The recent floods in Spain, previously in Central Europe, and last summer’s heat waves across Europe reflect the increasing frequency and severity of extreme weather events,” he details. “These events inflict economic damage, disrupt communities and challenge business continuity,” something that is key “for financial entities” that “face direct and indirect impacts,” he mentions.
“Climate phenomena can damage assets and infrastructure, causing financial losses to banks and insurers with interests in flood-prone areas,” argues the EBA. “For example. Indirectly, they can trigger economic crises and market disruptions – as in the case of agriculture – that affect commodity prices and lead to increased insurance claims or loan defaults due to supply chain disruptions that affect companies.”
Greater exposure to countries at risk
Furthermore, the EBA points out that Spain is the EU State with the greatest exposure to geopolitical risk countries. Specifically, as of June of this year, 10.78% of the assets of Spanish banks were located in countries that the S&P rating agency considers high risk, when the community average was 2.49%.
Specifically, it mentions that the concentration of these exposures is focused on Mexico and Türkiye (around 220,000 and 57,000 million euros), where BBVA basically has business.
Sources from the EBA have assured in a meeting with the media that this greater exposure is due to these “important investments in emerging countries”, which S&P classifies as high risk.
Furthermore, the EBA points out that the record profits of the entities due to the takeoff in interest rates have translated into a record dividend distribution and share buybacks that have been compatible with high capital levels.
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