The first-impact risks deriving from the Russia-Ukraine conflict, that is, deriving from exposures and market risk, do not represent a threat to the stability of the EU banking system, but the second-round effects could be more significant. This is the opinion expressed by the European Banking Authority (Eba).
The report found that European banks’ capital and liquidity ratios remained solid, profitability stabilized at higher levels than in the pre-pandemic period, and non-performing loan (NPL) ratios declined as asset quality continued to decline. to improve.
The EBA also notes that direct exposures to Russia, Belarus and Ukraine are limited, albeit with differences between countries. French, Italian and Austrian banks recorded the highest volume of exposures to Russian counterparties, while Austrian, French and Hungarian banks were those with the greatest exposure to Ukraine.
However, the EBA warns, second-round effects could be more relevant from a financial stability perspective. These are risks to profitability, asset quality, operational, market, liquidity and financing risks. Finally, the risks associated with cybernetics and information and communication technologies (ICT) remain high.