FRANKFURT, Jan 23 (Reuters) - Most big banks in Europe are failing to adjust their business to the looming decarbonisation of the bloc's economy and thus face increased financial, reputational and legal risk, the European Central Bank (ECB) said on Tuesday.

The ECB has been pushing banks for years to factor climate considerations into how they lend and assess risk but lenders have failed to heed its warnings and threats of additional capital requirements.

"Our analysis of 95 banks covering 75% of euro area loans shows that currently banks’ credit portfolios are substantially misaligned with the goals of the Paris Agreement, leading to elevated transition risks for roughly 90% of these banks," ECB board member Frank Elderson said in a blog post.

The overall credit exposure is comparatively small, however, worth about 189 billion euros ($206 billion) to business with assets in the oil and gas, coal, power generation, automotive, steel, and cement sectors, or roughly 5% of credit to firms, the ECB said in a new report.

Of the surveyed banks, 13 had exposures in excess of 5 billion euros each to the six key transition sectors, which account for roughly half of total CO2 emissions in the euro area.

Banks have been given until the end of 2024 to meet the ECB's climate disclosure requirements, including how much they are deviating from the expected decarbonisation pathway. If they fail this, then additional capital requirements may be introduced, the ECB has said.

"Transition planning must become a cornerstone of standard risk management, as it is only a matter of time before transition plans become mandatory," Elderson said.

A big risk for banks is that their actions deviate from their own communication. While plenty of banks say they take climate change seriously, their practices suggest complacency.

"Seventy percent of these banks could face elevated litigation risks as they are publicly committed to the Paris Agreement, but their credit portfolio is still measurably misaligned with it," Elderson said.

($1 = 0.9186 euros) (Reporting by Balazs Koranyi Editing by Mark Potter)