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DBRS Warns Of Middle East Risks For Greek And Cypriot Banks’ Key Sector

by THEFUTURE.TEAM

April 1, 2026

Rising Geopolitical Risks And Economic Vulnerabilities

DBRS said rising geopolitical tensions in the Middle East increase risks for Greece and Cyprus, citing their exposure to shipping and tourism. The assessment highlights sector dependence as a key vulnerability in both economies.

Impact On Economic Activity And Banking Systems

Despite recent resilience in Cyprus, ongoing volatility is affecting economic activity and the banking sector. The report, titled “Middle East Tensions Heighten Risks for Greek and Cypriot Banks’ Shipping and Tourism Exposures,” compares risks across both countries and identifies areas of exposure.

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Tourism And Shipping: The Economic Double-Edged Sword

Tourism and shipping account for a larger share of economic activity in Cyprus and Greece than in most EU countries. In Cyprus, these sectors represent 6.6% of gross value added, compared with 7.3% in Greece and an EU average of 2.9%. Beyond direct activity, tourism supports transport and leisure services, influencing consumption and broader economic output. According to DBRS, banks in both countries have above-average exposure to these sectors, increasing credit risk in the event of a prolonged downturn.

Differentiated Exposure: Cyprus Versus Greece

Exposure differs between the two banking systems. Greek banks hold a larger share of internationally secured shipping loans, while Cypriot banks have greater exposure to tourism-related activity. This makes Cyprus more sensitive to changes in travel demand. Both systems maintain profitability and capital buffers that may support performance under pressure.

Economic Ripple Effects And Sectoral Vulnerabilities

A decline in tourism flows would affect small and medium-sized businesses, household income, and real estate values. These factors are linked to asset quality in Cypriot banks. Early indicators point to higher cancellation rates and weaker travel demand in Cyprus, reflecting its proximity to regional tensions. Greece may see a more limited short-term impact due to lower exposure and potential diversion of tourism demand from affected regions.

Maintaining Profitability In A Challenging Environment

Bank profitability in both countries remained above the EU average as of the fourth quarter of 2025. Capital levels in Cypriot banks remain strong, while Greek banks continue to align with broader European benchmarks. Asset quality has improved, with non-performing loan ratios in transportation and storage close to 0% in 2025, compared with an EU average of 2.3%. In lodging and food services, non-performing loans stood at 2.1% in Greece and 0.7% in Cyprus, both below the EU average of 5%.

Sectoral Exposure And Wider Banking Implications

Data from the European Banking Authority show that transportation and storage accounted for 19.8% of loans to non-financial corporations in Greece and 11.2% in Cyprus in 2025, compared with an EU average of 5.5%. Exposure to lodging and food services reached 11.1% in Greece and 21.2% in Cyprus, exceeding the EU average of 2.6%.

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Cyprus Expects More French Visitors In 2027 As Air Capacity Expands

by THEFUTURE.TEAM

September 18, 2026

Cyprus expects more French visitors in 2027 as airlines increase capacity between the two countries, Tourism Deputy Minister Kostas Koumis said after meetings with tour operators in Paris.

France, one of Cyprus’ key tourism markets, has had a difficult 2026. French arrivals fell 46% year over year to 8,453 in August, from 15,663 a year earlier, according to the Statistical Service of Cyprus (Cystat). August arrivals were also nearly 50% below the 16,798 recorded in the same month of 2024.

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Overall, Cyprus received 2.82 million tourist arrivals between January and August, down 7% from the same period in 2025.

Air Connectivity Supports 2027 Outlook

Koumis discussed the 2027 outlook with senior executives from tour operators offering Cyprus holidays during the IFTM Top Resa travel trade fair in Paris.

Higher air capacity between France and Cyprus was a key focus of the talks. Participants also discussed the impact of geopolitical tensions in the Middle East on the French market and Cyprus’ efforts to adapt its tourism offering to French travelers.

“The French market is undoubtedly an extremely important market for our country’s tourism,” Koumis said, adding that France had regained importance only a few years ago and still had room to grow.

Improved air connectivity will be an important factor in that expansion, according to Koumis. “It is now clear that air connectivity between France and Cyprus is improving significantly, which is a basic prerequisite for the further growth of the market,” he said.

Cyprus Promotes Tourism And Regional Cooperation

Koumis attended the opening of IFTM Top Resa at the invitation of French Tourism Minister Serge Papin, who later visited the Cyprus stand. Held from Sept. 15 to 17 at Paris Porte de Versailles, the event brought together more than 32,000 tourism professionals representing 177 destinations and 1,650 brands, according to organizers.

During his visit, Koumis also met Egyptian Tourism Minister Sherif Fathy. Cyprus and Egypt reaffirmed their tourism cooperation and discussed opportunities to strengthen ties further.

French media interviews covered Cyprus’ tourism offering, infrastructure and services, along with efforts to develop specialized tourism products. Regional instability weighed on arrivals in 2026, particularly during the spring, although the decline narrowed over the summer.