EU/EEA banks remain resilient with solid capital, liquidity and profitability, but face a challenging and rapidly evolving risk environment driven by geopolitical tensions, operational and cyber threats, and growing interconnectedness with non-bank financial institutions (NBFIs), the European Banking Authority (EBA) said in its Spring 2026 Risk Assessment Report (RAR) published on 18 June 2026.
The report, accompanied by the Q1 2026 Risk Dashboard and the Spring 2026 Risk Assessment Questionnaire results, notes that funding conditions remain broadly favourable despite increased financial market uncertainty. However, heightened geopolitical tensions, including the conflict in the Middle East, could affect banks through higher energy prices, renewed inflationary pressures, weaker economic activity and increased market volatility. While direct exposures to affected regions remain limited, indirect and second-round effects could have broader implications for borrowers, funding conditions and financial markets.
Operational and cyber risks are key concerns, the EBA warns. The growing digitalisation of financial services, wider adoption of advanced technologies including artificial intelligence, and an evolving cyber threat landscape — including the rapid development of frontier AI models — may amplify risks through new attack vectors and potential misuse of AI-enabled tools. The report underlines the importance of maintaining strong operational resilience, cybersecurity controls and contingency planning.
The EBA also points to the continued expansion of private credit markets and growing interconnectedness between banks and NBFIs. Exposures of EU/EEA banks towards NBFIs increased notably in recent quarters. While exposures towards private credit are estimated to be limited, they are concentrated in larger institutions. Although private credit provides an important source of financing to the real economy, its expansion warrants close monitoring given potential risk transmission channels through funding relationships, common exposures and competitive pressures in lending markets.
The report draws on funding plan data and outlooks to provide a comprehensive view of banks’ lending activity, balance sheet developments, funding strategies and profitability prospects. The EBA calls for continued vigilance from banks and supervisors to address the evolving risk landscape.
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