David Bailey, considered the internal frontrunner for the top job at the Bank of England’s regulatory arm, has mounted a firm defence of UK banks’ climate commitments. His remarks come at a critical time, just weeks after the high-profile failure of the Net Zero Banking Alliance (NZBA).
The UN-backed alliance folded in October after losing its most powerful members. US banks were the first to leave, reportedly to avoid political backlash, but the exits of UK giants HSBC and Barclays effectively ended the initiative.
Bailey, who may soon replace Sam Woods as head of the PRA, played down the significance of the collapse. He insisted that firms remain “very actively engaged” with the regulator on managing the financial risks of climate change, describing their commitment as “vibrant.”
As the potential next leader, Bailey is also overseeing a major reform package aimed at boosting growth, including the “strong and simple” framework. This new system is designed to help smaller lenders like Metro Bank and Starling compete by freeing them from the complex rules applied to global giants.
While praised for its initial 2021 climate stress tests, the PRA under its current leadership has been criticised for not following up with rules that would force banks to hold more capital against high-pollution loans.