Finance
HSBC, StanChart most exposed to mideast conflict among European banks, J.P. Morgan warns
Published by Global Banking & Finance Review®
Posted on March 12, 2026
3 min readLast updated: March 12, 2026
Quick Summary
J.P. Morgan warns that HSBC and Standard Chartered carry the highest exposure among European banks to the Middle East conflict—raising earnings risk, though credit losses remain unlikely due to high-quality corporate borrowers.
HSBC and StanChart Face Highest Middle East Exposure Among European Banks
European Banks' Exposure to Middle East Conflict
March 12 (Reuters) - Among major European banks, HSBC and Standard Chartered are most exposed to the conflict in the Middle East, potentially pressuring earnings, J.P. Morgan cautioned on Thursday.
Earlier this week, the STOXX 600 Banks index touched a three-month low, having fallen nearly 6% since the last close of February 27. HSBC dropped over 5% on Thursday and StanChart fell more than 2%.
Rising energy costs will affect corporate lending exposure, particularly across agriculture, manufacturing, construction and transport sectors, the brokerage said.
Exposure Estimates for HSBC and StanChart
StanChart's Middle East Exposure
- Excluding Turkey and Egypt, the brokerage forecast Middle East exposure for StanChart's revenue and profit before tax (PBT) to be about 8% and 12%, respectively.
- StanChart has disclosed about $9 billion of loans to the UAE in fiscal 2025, equivalent to nearly 2% of its total loan book, with about $6 billion of loans booked in its UAE branches as of third quarter, J.P. Morgan said.
HSBC's Middle East Exposure
- For HSBC, it estimates revenue and PBT exposure at about 4%.
- PBT exposure could go up to nearly 9% when including Egypt, Turkey, and Saudi Arabia markets for HSBC, it said.
- J.P. Morgan estimates HSBC's Middle East lending exposure, largely comprising UAE and Qatar, of about $23 billion for fiscal 2025, worth about 2% of its total loan portfolio.
- The brokerage also expects additional loan exposures relating to the lender's 31% stake in Saudi Awwal Bank and multinational client exposure in other global entities.
Risk Assessment and Earnings Pressure
Nature of Portfolio Risk
- However, since their Middle East portfolios are concentrated among high-rated corporates, J.P. Morgan sees earnings pressure as primary risk rather than credit losses.
Other European Banks' Exposure
Limited Exposure Among Other Banks
- Other European banks including Julius Baer, Societe Generale, ING, Barclays, Banco Santander, BNP Paribas, Deutsche Bank have limited exposure with less than 1% for both revenue and profit, J.P. Morgan said.
- About 11% of assets under management for Julius Baer comes from clients in the Middle East.
Wealth Management Trends
- However, the brokerage expects both UBS and Baer to benefit from multiple wealth-booking centers with high-net-worth individuals (HNIs) diversifying their wealth to protect it from geopolitical risks.
Market Outlook for European Banks
UBS Global Wealth Management's Position
- Separately, UBS Global Wealth Management downgraded European banks to "neutral" in a note on Wednesday, citing limited scope for sustained gains beyond an initial rebound even if energy flows are restored swiftly.
(Reporting by Kanchana Chakravarty in Bengaluru; Editing by Janane Venkatraman)
Key Takeaways
- •J.P. Morgan flags HSBC (~4% revenue/PBT exposure; up to ~9% including Egypt, Turkey, Saudi) and StanChart (~8% revenue, ~12% PBT) as most exposed among European peers.
- •HSBC holds ~$23 billion in Middle East loans (mainly UAE & Qatar), while StanChart discloses ~$9 billion to UAE, about 2% of their loan portfolios.
- •Other European banks including SocGen, ING, Barclays, BNP Paribas, Deutsche Bank have limited exposure (<1%), with UBS and Julius Baer possibly benefiting from HNIs diversifying wealth amid geopolitical risks.
References
Frequently Asked Questions about HSBC, StanChart most exposed to Mideast conflict among European banks, J.P. Morgan warns
1Which European banks have the highest exposure to the Middle East conflict?
HSBC and Standard Chartered have the highest exposure among European banks, according to J.P. Morgan.
2How much of HSBC's revenue and profit is exposed to the Middle East?
HSBC's Middle East exposure is estimated at about 4% for both revenue and profit before tax, rising to nearly 9% when including Egypt, Turkey, and Saudi Arabia.
3What sectors are most impacted by rising energy costs due to conflict?
Corporate lending in agriculture, manufacturing, construction, and transport sectors are most affected.
4How significant is Standard Chartered’s lending exposure in the UAE?
Standard Chartered disclosed about $9 billion of loans to the UAE in fiscal 2025, about 2% of its total loan book.
5How are other major European banks impacted by the Middle East conflict?
Banks like Julius Baer, Societe Generale, ING, Barclays, Banco Santander, BNP Paribas, and Deutsche Bank have limited exposure, with less than 1% in both revenue and profit.
