Climate risks: BAM and World Bank decipher the Moroccan banking sector

Climate risks: BAM and World Bank decipher the Moroccan banking sector
Climate risks: BAM and World Bank decipher the Moroccan banking sector

This report, the results of which were presented during a high-level workshop held in the presence of the Director General of BAM, Abderrahim Bouazza, and the country director of the BM for the Maghreb and Malta, Jesko Hentschel, reveals that the Moroccan banking sector is exposed to physical climate risks, such as floods and droughts.

In his opening speech, A. Bouazza affirmed that this report, which took two years to develop, constitutes another major step in the process of progressively establishing a framework for regulating climate-related risks. This study, he continued, helped to better understand climate issues, to identify potential sources of climate-related risks, and to establish and test methodologies and tools for measuring related financial risks. to the climate. It was able to provide the first estimates of the impact of climate shocks, according to several scenarios, on the balance sheets, solvency and profitability of banks, said A. Bouazza.

The said study also made it possible to learn lessons from the difficulties encountered in terms of data on climate-related risks and in terms of modeling, given the complexity of the links between macroeconomic, financial and climatic impacts, he said. added. And to maintain that “the ongoing work on the development of the climate taxonomy at government level with the parties concerned including Bank Al-Maghrib and with the support of the World Bank should contribute to reducing the data gap”. This exercise will make it possible to continue to evolve the regulatory framework and improve the assessment of climate risks while resolving the conceptual and technical challenges encountered, indicated A. Bouazza.

For his part, J. Hentschel highlighted the increase in the frequency of floods, “a phenomenon which generates considerable annual costs estimated at 4.5 billion DH for the Kingdom”. This report used macroeconomic models to assess the financial impact of the floods, he detailed, specifying that these models also examined the relationship between the financial sector and the macroeconomy, as well as the risks associated with the transition to a green growth. In this sense, J. Hentschel estimated that this transition represents an opportunity for Morocco, especially since the Kingdom is geographically close to Europe and has already undertaken significant changes in its energy matrix and its model. of growth.

During this workshop to disseminate this report, panelists discussed several strategic questions, including the next phases of the work envisaged by BAMas well as the support of the World Bank to this program.

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