London — European banks have been urged to stay alert to the risk of fake news triggering sudden deposit withdrawals, as the war in Ukraine continues to rattle markets and heighten uncertainty across the financial system.
The warning came from the European Banking Authority, which said misinformation circulating during periods of heightened geopolitical tension could undermine confidence in individual lenders, even when their underlying financial positions remain sound.
“With market sentiment highly volatile and driven by news flow, banks’ liquidity levels can become vulnerable due to the spread of inaccurate information,” the EBA said in its latest risk dashboard, which examines the sector’s exposure to Russia and Ukraine.
The watchdog cautioned that coordinated campaigns spreading false or misleading claims could spark deposit outflows from targeted banks, creating pressure unrelated to fundamentals. Such risks are amplified during wartime, when uncertainty and rapid news cycles dominate investor and consumer behavior.
While flagging the threat from misinformation, the EBA sought to reassure markets about the direct financial exposure of EU banks to the conflict. It said lenders’ holdings linked to Russia are too small to pose a systemic threat to the bloc’s financial stability.
According to the EBA, EU banks reported combined exposures of €76 billion to Russia and €11 billion to Ukraine in the fourth quarter of 2021. These exposures are concentrated mainly among lenders in Austria, France, and Italy.
However, the authority warned that indirect effects from the war could still weigh on banks’ performance. Economic disruption, rising credit risks, and the potential for cyberattacks linked to the conflict could all erode profitability, even if capital and liquidity buffers remain intact.
The EBA’s comments come as European regulators and banks step up monitoring of liquidity, cybersecurity, and communications strategies, seeking to guard against panic driven by false information rather than financial reality.