Energy transition may be subprime moment for European banks

Fossil-fuel assets are equivalent to 131% of Credit Agricole’s CET1 capital, 109% for Deutsche Bank and 68% at Spain’s Banco Santander SA, according to the research.

LONDON: A rapid and chaotic energy transition would leave Europe’s biggest banks in financial peril comparable to the subprime crisis that United States lenders faced in 2008.

The 11 largest banks in the European Union, including BNP Paribas SA, Deutsche Bank AG and UniCredit SpA, have €532bil (US$648bil or RM2.67 trillion) of investments and loans financing everything from extraction to transportation of fossil fuels, equivalent to 95% of their total common equity tier 1 capital (CET1), according to a report from think tank Rousseau Institute, Friends of the Earth France and fellow environmental nonprofit Reclaim Finance.