The war in Ukraine might put EU banks through their paces
On the 1st of April, the European Banking Authority (EBA) published its Risk Dashboard for the fourth quarter (Q4) of 2021. According to EBA’s initial assessment, the first round of impacts wasn’t an important threat for the EU banking sector from a financial stability perspective, but second-round effects may be more material. The key drivers of these concerns are the current high level of uncertainty about the outcome of the war in Ukraine and the potentially large impact on the wider EU and global economy. Key drivers include the direct economic fallout of the war including the fiscal impact, the impact of sanctions (from all actors involved), cyber risks and the longer-term impact on supply chains in the global economy.
In this alert you will read more about the exposure of EU banks to Russian and Ukrainian counterparties and how they maintain strong capital and profit level, as NPLs trend lower.