Non-EU tech reliance and private credit raise EU financial risks
The European Supervisory Authorities have flagged vulnerabilities from third-country dependencies, rapid AI developments, and private credit exposures. The Joint Committee presented its cross-sectoral risk assessment on September 23, 2026.
Vulnerabilities beyond single market borders
EU financial stability faces rising cross-border and technological exposures, according to the joint assessment by EBA, EIOPA, and ESMA.
In securities markets, 52 percent of equity UCITS assets are invested in the United States, while over half of outstanding repo transactions involve non-EEA entities.
Operational vulnerabilities are acute in banking, where 80 percent of institutions view reliance on non-EEA ICT providers as their top operational risk, alongside foreign payment solutions cited by 60 percent.
Accelerated advances in frontier artificial intelligence models worsen these exposures by automating cyberattacks and discovering software vulnerabilities at scale.
Under the surface of solid bank returns
European banks maintain resilient fundamentals, with average CET1 ratios at 16.2 percent and return on equity at 10.5 percent in the first quarter of 2026.
Non-performing loan ratios stood stable at 1.8 percent, representing 375 billion euros.
However, non-bank interlinkages are expanding rapidly.
EU bank exposures to private credit funds and related managers reached nearly 150 billion euros, or 0.6 percent of total assets, concentrated among global systemically important institutions.
Meanwhile, EU private credit fund assets reached 97.1 billion euros, with 95.2 percent invested in Europe.
Solid buffers, dangerous blind spots
Solid capital buffers cannot shield EU lenders from dependencies outside their regulatory perimeter.
Concentrated reliance on foreign cloud providers and opaque private credit creates dangerous systemic transmission channels.
Regulators must back their warnings with binding supervisory interventions.