Greek Governor Stournaras warns of rising financial risks for 2026
Yannis Stournaras, Governor of the Bank of Greece, presented the banking and financial outlook for Greece and Europe in 2026. Speaking at an Economist event in Athens, he highlighted significant progress in the Greek banking sector but warned of elevated geopolitical and cyber risks.
Greek and European banks rebuild resilience
The Greek banking sector has undergone a profound transformation over the past decade, significantly improving balance sheets, profitability, liquidity, and capital positions.
Non-performing loans (NPLs) have seen a 95 percent reduction since their March 2016 peak, with the system-wide ratio falling to 3.6 percent by Q3 2025, supported by the Hellenic Asset Protection Scheme (HAPS).
Domestic liquidity remains ample, and profitability is solid, with Return on Equity around 12 percent.
Greek banks have also diversified income sources and expanded regionally, including acquisitions in Cyprus and strategic partnerships in Romania.
Capital adequacy stands at approximately 20 percent.
These improvements reflect a broader strengthening across the European banking sector.
EU banks' capital buffers reached 20.4 percent, the average NPL ratio declined to 1.8 percent, and average Return on Equity reached 10.7 percent by September 2025.
Geopolitical and digital risks loom large
Despite stronger fundamentals, the financial outlook for 2026 faces significant downside risks from external and structural factors.
Geopolitical risk remains a dominant uncertainty, potentially affecting banks through weaker growth and market volatility.
Cyber risk has emerged as a key operational and financial stability concern, requiring DORA compliance and continuous digitalization investment.
Pockets of vulnerability in corporate and retail lending need close monitoring.
Structural challenges like demographics and climate change, with extreme weather events, pose longer-term economic and financial losses.
Contagion risks from non-bank financial intermediaries (NBFIs) and crypto-asset markets can amplify shocks through liquidity and confidence channels, undermining monetary sovereignty.
New risks demand continued vigilance
Greece's banking sector transformation is a remarkable success story, now mirrored across Europe.
However, emerging threats from geopolitics, cyberattacks, and interconnected non-bank finance underscore that past achievements offer no guarantee for future stability.
Supervisors must therefore maintain strict prudential standards and push for deeper European financial integration.