Lucy Craymer and Upasana Singh
(Reuters) – The Reserve Bank of New Zealand said on Tuesday that preliminary analysis of its climate change stress tests suggested flooding of rivers and surface water could cause lenders of residential mortgage portfolios are more at risk than coastal flooding.
It said in a statement that in its assessment, it focused on the river and surface water flooding risks faced by the Bank in the Auckland region.
“The results indicated that, In severe cases, more than a quarter of banks’ current Auckland mortgages are on land that could be affected by flooding,” it said.
It also requires banks to measure the risk of their mortgage portfolios to flood zones with varying degrees of sea level rise 20 centimeters to 1 meter.
“The results found significant differences in the share of mortgages on properties within coastal flood zones across regions,” it noted.
The findings are part of the November 2022 Financial Stability Report scheduled for Wednesday.
RBNZ Deputy Governor Christian Hawkesby said the purpose of the exercise was to support banks in establishing climate risks and finding solutions program capability.
“This will lead to more proactive management of climate risks,” he said.
