Template-Type: ReDIF-Article 1.0

Author-Name: Renato Ritter
Author-Workplace-Name: Magyar Nemzeti Bank
Author-Email: ritterr@mnb.hu


Title: Banking Sector Exposures to Climate Risks - Overview of Transition Risks in the Hungarian Corporate Loan Portfolio

Abstract: Risks arising from climate change can have a serious impact on the operation of
the financial system. In this study, the credit exposures of banks and bank branches
operating in Hungary are assessed using two methodologies. To put the results of
the analysis into context, they are compared with the results of the survey conducted
by the European Banking Authority using the same methodologies. Based on both
methodologies, Hungarian institutions may be exposed to the negative effects of
climate change at a higher rate than their counterparts in the European Union.
Using the two methods together, risk groups were formed, on the basis of which
1.2 per cent of Hungarian institutions were classified in the upper quartile and more
than 55 per cent of the banking system was classified in the upper middle quartile.
The methods presented can help not only assess the banking system's transition
exposures at the systemic level, they can also be used to assess corporate credit
exposures at the institutional level.

Classification-JEL: C81, G21, Q54
Keywords: climate change, transition risk, sectoral exposure, greenhouse gas intensity
Pages: 32-55
Volume: 21
Issue: 1
Year: 2022
File-URL: https://en-hitelintezetiszemle.mnb.hu/letoltes/fer-21-1-st2-ritter.pdf
File-Format: Application/pdf
Handle: RePEc:mnb:finrev:v:21:y:2022:i:1:p:32-55