We examine the relationship between environmental policy stringency and bank stability using panel data techniques in a sample of 13-14 OECD countries. In contrast to previous studies, we focus on banking sector data in order to draw implications for macroprudential banking sector policy. Our estimates show that environmental policy stringency has a negative impact on bank stability indicators proxied by return on assets and return on equity, household debt and banking sector liquidity. In addition, we show that environmental policy stringency is associated with a higher share of regulatory capital and lower staff costs. The 2015 Paris Agreement on climate change has reinforced these effects. We also identify mitigating factors - good governance (especially the rule of law and control of corruption) and the adoption of the ”green economy.”