Geopolitics has become a permanent fixture of the risk landscape, but new research from Prometeia suggests that the conflicts dominating headlines are not always the ones hitting bank balance sheets hardest.
By comparing media coverage with what banks actually tell investors, the Italian consultancy has found a gap between attention and impact.
Prometeia notes that the annexation of Crimea, the Brexit referendum and the US-China trade war all showed how international tensions can unsettle markets. Russia’s invasion of Ukraine in February 2022 made geopolitics a central economic risk once again. Shocks have since become more frequent: conflict in the Middle East from October 2023, US tariff escalation in April 2025, and the war between the United States and Iran in February 2026. That war closed the Strait of Hormuz and pushed oil prices back to early-2022 levels. Prometeia describes it as the most far-reaching geopolitical event since the invasion of Ukraine.
To track these risks, Prometeia uses natural language processing to build two sets of indicators. The Geopolitical Pulse Index analyses specialist Oxford Analytica coverage daily. It reaches beyond military and terrorist threats to include cybersecurity and commodity price risks, in line with the ECB’s 2026 stress test definition. The Geopolitical Bank Talk Index examines banks’ quarterly earnings calls to show how risks actually spread through institutions.
The news-based index peaked with the invasion of Ukraine and has stayed structurally elevated since. Prometeia attributes much of that persistence to new flashpoints in the Middle East.
Earnings calls tell a different story. Prometeia used a large language model to separate “substantive” references, which link geopolitics to concrete effects on results or operations, from “contextual” boilerplate found in generic risk lists. For Russia, substantive commentary has dominated since 2015. In 2022, banks immediately reported quantified impacts, such as deconsolidating Russian branches, making provisions for direct exposures and absorbing losses on trade receivables.
For the Middle East, banks mainly cited tensions as macroeconomic background, even through the Gaza war. Signs of change emerged with the 12-day Israel-Iran war in June 2025. Both measures then accelerated sharply after the US-Iran conflict began, with substantive references growing fastest as energy and transport costs rose.
Prometeia’s analysis of European banks across seven impact areas shows that Russia’s invasion affected every area. In 2022, 18 institutions (40.9%) reported credit risk impacts, including specific provisions, Stage 2 reclassifications and prudential buffers. For the Middle East, 22.7% reported credit impacts, almost entirely through buffers tied to gloomier macroeconomic scenarios. Only two banks reported income statement effects. Risk appetite ranked second, and no bank has announced a structural exit from the region.
Prometeia concludes that the impact of Middle East risk remains largely forward-looking. However, recent signals suggest it may begin to turn into concrete effects, and the coming quarters will show whether that shift lasts.
For more insights, read the full report here.
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