Politis

Strong Banking Sector in Cyprus and EU - Low Exposure to Middle East Counterparties

Published March 24, 2026, 07:21
Strong Banking Sector in Cyprus and EU - Low Exposure to Middle East Counterparties

The European Banking Authority (EBA) has found that the exposure of Cypriot and European banks to counterparties in the Middle East is limited. However, the EBA warns that an escalation of tensions in the region could have secondary effects on the economy, such as rising energy prices, inflationary pressures, and a slowdown in global economic growth. According to the EBA, banks have strong capital reserves and profitability, which constitute the first line of defense against potential risks. The authority is closely monitoring the situation and assessing the potential impact on the EU banking sector. The exposure of banks to the Middle East is low both directly, through loans and investments, and indirectly, through their transactions. However, the EBA emphasizes that geopolitical uncertainty can affect investor confidence and lead to increased market volatility. Overall, the EBA estimates that the banking sector in Cyprus and the EU is resilient and able to cope with the potential challenges arising from the situation in the Middle East, but continuous vigilance and preventive measures are required.