(Cinco Días, Álvaro Bayón, March 24, 2026)
Spanish banks have a total exposure of 18,563 million euros to the Middle East (Iran, Iraq, Israel, Jordan, Lebanon, and other countries in the region) at the end of 2025, ranking third in Europe after France with 60,825 million and practically on par with Germany with 18,954 million. The exposure grew by 33% in the second half of last year, driven mainly by loans to businesses amounting to 18,385 million, almost equally split between the financial sector and non-financial companies.
Customer deposits from the area held at Spanish banks reached 16,638 million euros, an increase of 22% compared to the previous year, placing Iberian institutions second in Europe for liabilities connections, just behind France. The figure does not include exposure in Turkey through BBVA’s Garanti, which would further increase the total amount.
The ECB is closely monitoring the potential impact of the war between the United States, Israel, and Iran on the European banking sector. The main concern is not so much the direct risk, estimated at 0.7% of fully loaded CET1 capital and 0.6% of liabilities, but the second-round effects related to rising energy prices, the slowdown of European growth, inflation, and interest rates, as well as the possibility of cyberattacks against digital banking services. At the same time, the Authority is conducting geopolitical stress tests in which banks must simulate scenarios capable of eroding up to 300 basis points of capital; the results will be published in aggregate form in the summer.
Record exposure of Spain
“The Spanish banking sector records an exposure of 18,563 million euros to the conflict in the Middle East at the end of the last fiscal year, according to data released by the European Banking Authority (EBA). The total volume places it as the third European country with the most exposed financial sector, after France and practically on par with Germany.”
33% increase in six months
“EBA data indicate that Spanish banks’ exposure to the area increased by 33% in the second half of last year. Most of this exposure corresponds to loans to businesses in those territories, amounting to 18,385 million, almost equally divided between credits to the financial sector and to non-financial companies.”
ECB concern
“The immediate analysis of the impact of escalating tension in the Middle East is one of the priorities of European institutions. In particular, the ECB has asked the main banks of the euro area about their exposure to the region. The ECB’s concern is not so much the direct exposure but rather the so-called second-round effects. That is, the economic impact of rising energy prices and what this may cause to European growth, inflation, and interest rates.”
Growing deposits
“On the liabilities side, customer deposits from that area at Spanish entities reach 16,638 million, after recording a 22% increase in the last fiscal year. This means that, on the banking liabilities side, Spanish entities are the second most connected with this region. Only France surpasses them.”
Geopolitical stress tests
“All this happens while the ECB subjects the sector to the so-called geopolitical stress tests. In these, entities must explain which events of this type could cost them 300 basis points of capital. The supervisor started this process a few weeks ago and is currently working with banks on these scenarios, which they will have to officially submit this spring.”
(Excerpt from the newsletter by Giuseppe Liturri)
