ECB Moves From Expectation to Enforcement in ABANCA Climate Risk Case

Key Takeaways

• ECB Imposed Penalties: The European Central Bank ordered ABANCA to pay €187,650 in periodic penalty payments.
• Missed Deadline: ABANCA failed to complete its climate and environmental risk materiality assessment by the 31 March 2024 deadline.
• Supervisory Shift: The action reflects the ECB’s move from guidance to enforceable requirements on climate risk oversight.
• Right to Appeal: ABANCA may challenge the decision before the Court of Justice of the European Union.

Deep Dive

The European Central Bank has ordered Spanish lender ABANCA to pay €187,650 after the bank failed to complete a required assessment of its climate-related and environmental risks within the deadline set by supervisors.

The ECB said ABANCA did not sufficiently assess or document which climate and environmental risks were material to its balance sheet and operations. The bank had been instructed to complete that work by 31 March 2024, following a December 2023 supervisory decision that made the expectation legally binding. Instead, the delay stretched for 65 days, triggering daily penalty accruals.

This is one of several recent enforcement steps reflecting how the ECB’s approach to climate oversight has shifted from guidance to hard requirements. Since 2020, the central bank has rolled out expectations for how banks should identify, measure, and disclose climate and environmental risks. A 2022 climate stress test and thematic review found widespread gaps across the sector, prompting follow-up letters and staggered deadlines for each institution.

Where those deadlines were not met, the ECB has begun applying enforcement tools, including periodic penalty payments. These payments are designed to compel compliance rather than punish after the fact, accruing daily until the issue is resolved.

ABANCA can challenge the decision before the Court of Justice of the European Union.

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