FRANKFURT (Reuters) – Banks in southern Europe are set to be among the hardest hit if climate change is not mitigated as their clients are most exposed to natural hazards such as wildfires, a European Central Bank study showed on Wednesday.

To assess how banks in the euro area would deal with climate change and to determine whether they could withstand natural disasters or adopt policies that reduce emissions, the ECB ran simulations.

The simulations showed that defaults on bank loans could increase by 7.7% in the following 30 years under a “hothouse scenario”, where there is no effort to reduce climate change.

For four other countries, however, the increase would be nearly twice as large. While the ECB has not named them, a chart from the report shows that Greece, Portugal Spain, and Malta have the highest percentage of companies at risk due to climate change.

The ECB stated in its report that while European countries face similar transition risks when looking at tail companies, there were a handful of countries with exceptional vulnerability to high levels of physical risk.