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ECB’s New Supervisor Warns Against Using Capital as Green Lever

ECB’s New Supervisor Warns Against Using Capital as Green Lever

The newest member of the European Central Bank’s Supervisory Board says climate considerations shouldn’t play a role in deciding how much capital banks should hold against potential future losses.

Anneli Tuominen, who was named on Thursday to succeed Finnish countryman Pentti Hakkarainen, says she’s against using capital rebates as an incentive for green lending, as the European Union is considering. The EU is also mulling harsher requirements for lending to polluters.

“Capital requirements should always be risk-based and not be influenced by political decisions,” Tuominen said by phone after her appointment. Banks “need to take a longer-term view to the shift to the carbon neutral era, and be able to analyze and stress test their business and loan portfolio.” 

Read More: Europe Fast-Tracks Decision on Bank Capital for Green Lending

Tuominen’s selection brings the ECB-appointed representatives to gender parity, though most members on the board remain male. Tuominen has overseen the Finnish financial industry as head of the supervisory authority since 2007, and said she plans to make consistent supervision across the euro area her key goal at the ECB.

“I want to work toward ensuring banking supervision is as uniform as possible across the euro area and that banks have a level playing field, and do all that as efficiently as possible,” she said. Tuominen’s start date is yet to be decided.

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