Pedro Machado addressed concerns stretching from Middle East tensions to the recent wobble in private markets, while warning that a boom in complex securitisation deals merits closer scrutiny

International News via Reuters:

Euro zone banks face only a limited direct impact from the war in Iran, but the larger danger lies in how a weakened economy might feed back into lenders’ balance sheets, a senior European Central Bank supervisor told Reuters.

In a wide-ranging interview, Pedro Machado addressed concerns stretching from Middle East tensions to the recent wobble in private markets, while warning that a boom in complex securitisation deals merits closer scrutiny.

The threat of a broader conflict in the Middle East has sharpened fears of another inflation burst and renewed pressure on growth in the euro zone, which depends on Gulf suppliers for some of its gas and on Suez Canal routes for Asian goods.

Machado, one of the ECB’s top bank watchdogs, said euro zone banks’ direct exposure to Iran and Israel was small relative to their ability to absorb losses at 0.7% of core capital for assets, such as loans, and 0.6% for liabilities like bank bonds.

“Even if you include neighbouring countries, the exposures are pretty contained, representing slightly less than 1% of supervised entities’ total assets,” he said in an interview. 

Large euro zone banks have assets worth 27.8 trillion euros ($32.32 trillion), according to the latest ECB data, meaning 1% of that would be worth 278 billion euros.

Machado did not quantify the exposure for individual banks, consistent with the ECB’s communication policy.

The more consequential risk, he added, lies in any renewed surge in energy prices feeding into inflation and, ultimately, a slowdown that would squeeze borrowers.

“In the long term if we have energy prices heating up, we might have an inflation spike with recessionary potential impacts in terms of economic activity,” Machado said. “And this translates into a potential impact on unemployment, which is a variable that is quite important for banks.”

SHADOW BANKS IN FOCUS

Machado downplayed the relevance for European lenders of the recent turbulence in U.S. private credit – most recently at Blackstone’s flagship fund – saying he had not seen “any particular evidence” of spillover.

But he said the ECB was sharpening its focus on synthetic securitisations, in which banks shift portfolio risks to outside investors using derivatives or guarantees. Supervisors want to ensure the risk does not boomerang back into the banking system through indirect financing channels.

“We intend to collect individual information on those transactions to then try to have a much more aggregate view on those, both in terms of volume but also in terms of potential exposure through the back door,” he said.

Synthetic risk-transfer deals have been booming, rising 85% in the first half of 2025 from a year earlier, helped by changes in regulation.

($1 = 0.8602 euros)

Editing by Kirsten Donovan and Nick Zieminski

Governments have scrambled to arrange flights out of the Middle East for tens of thousands of citizens stranded by the intensifying U.S. and Israeli conflict

International News via Reuters:

Airline shares rebounded on Thursday, as more flights took off from the Middle East, giving carriers some reprieve after U.S.-Israeli strikes on Iran wiped billions of dollars off their market value earlier in the week.

Governments have scrambled to arrange flights out of the Middle East for tens of thousands of citizens stranded by the intensifying U.S. and Israeli conflict that closed most of the region’s airspace due to the risk of missiles hitting planes.

Shares in Hong Kong’s Cathay Pacific Airways closed up 2.2%, Qantas Airways rose 1% and Korean Air Lines jumped 5.6%. Japan Airlines closed down 1%, paring the week’s losses.

Major Chinese carriers such as Air China,, China Eastern Airlines, and China Southern Airlines, fell between 1% and 4% in both Hong Kong and Shanghai as they stabilised.

“Asian airlines are highly sensitive to Iran’s situation due to exposure through routes and energy in both revenue and costs. Any news on shortening the duration of the war can easily turn sentiment,” said Gary Ng, a senior economist at Natixis.

Ticket prices soared on popular routes such as Australia to Europe after the closure of Dubai, the world’s busiest international airport, which normally handles more than 1,000 flights a day.

Emirates and Etihad Airways are now operating a limited number of services from Dubai and Abu Dhabi through the United Arab Emirates’ safe air corridors.

Qatar Airways said it would run limited relief flights from Thursday for stranded passengers departing from Muscat in Oman to six European destinations including London, Berlin and Rome as well as from Riyadh to Frankfurt.

These would be the airline’s first flights since Saturday, when its Doha hub was shut after the strikes on Iran, according to flight-tracking service Flightradar24.

By Thursday morning, Emirates flights had left Dubai for destinations such as Sydney, Hong Kong, Paris, Amsterdam, Toronto and Mumbai, data from the tracking service showed, though the vast majority of services remained cancelled.

The number of take-offs and landings at Dubai airport totalled 161 on Wednesday, Flightradar24 said, nearly double those of the previous day.

A U.S. government charter flight was bringing Americans home from the Middle East, with additional flights being arranged from other regional locations, the U.S. State Department said.

Since February 28, more than 17,500 Americans have returned to the United States from the Middle East.

Canada said it was working to repatriate stranded citizens on commercial flights and contracting charter flights.

In addition to upending travel, the escalating Middle East conflict has also reduced the world’s air cargo capacity by more than a fifth and driven up freight rates.

ASIAN AIRLINE SHARES REBOUND

Jet fuel prices have soared globally since the strikes on Iran, hitting an all-time high in Singapore on concerns of supply disruption, S&P Global Platts said on Thursday.

Nevertheless, many Asian airline shares rebounded from double-digit percentage drops in the past few days amid concerns over how long the conflict might last and the impact of surging oil prices.

“For now, I consider this rebound to be primarily short-term in nature, and its sustainability will still depend on the ongoing situation in the Iranian conflict,” said Kenny Ng, a securities strategist at China Everbright Securities International.

In a sign of possible relief, operatives from Iran’s Ministry of Intelligence signalled openness to the U.S. Central Intelligence Agency (CIA) to talks on ending the war, the New York Times said, citing officials briefed on the matter.

The restrictions on airspace forced airlines to reroute flights, load extra fuel or make additional refuelling stops to guard against sudden diversions or longer flights on safer routes.

Marooned tourists and some expatriates have also tried to find their own way out of the Middle East through Saudi Arabia or Oman, where the airspace remains open.

Reporting by Julie Zhu and Joyce Zhou in Hong Kong; Additional reporting by Li Gu in Shanghai; Writing by Anne Marie Roantree; Editing by Jamie Freed and Clarence Fernandez

Brent crude advanced $2.44, or 3%, to $83.84 per barrel by 0722 GMT, a fifth session of gains. U.S. West Texas Intermediate crude rose $2.44, or 3.27%, to $77.10

International News via Reuters:

Oil prices surged more than 3% on Thursday, extending a rally as the escalating U.S.-Israeli war with Iran raised fears of prolonged disruptions to vital Middle East oil and gas supplies.

Brent crude advanced $2.44, or 3%, to $83.84 per barrel by 0722 GMT, a fifth session of gains. U.S. West Texas Intermediate crude rose $2.44, or 3.27%, to $77.10.

Crude oil markets remained on edge as they face ongoing risks to supply following the attacks in the Middle East, with concerns centred on trade flows through the Strait of Hormuz, ANZ analysts said in a note on Thursday.

Iran launched a wave of missiles at Israel early on Thursday, sending millions of residents into bomb shelters as the conflict entered its sixth day and just hours after moves to halt the U.S. attacks were blocked in Washington.

On Wednesday, a U.S. submarine sank an Iranian warship off Sri Lanka, killing at least 80 people, and NATO air defences destroyed an Iranian ballistic missile fired towards Turkey.

Iranian forces have struck oil tankers in or near the Strait of Hormuz. Explosions were reported near a tanker off Kuwait, according to the United Kingdom Maritime Trade Operations.

The escalation came as the powerful son of Iran’s slain supreme leader emerged as a frontrunner to succeed him, suggesting Tehran was not about to buckle to pressure five days after the United States and Israel launched a military campaign that has killed hundreds and convulsed global markets.

Iraq, the second-largest crude producer in the Organization of the Petroleum Exporting Countries, has cut output by nearly 1.5 million barrels a day for lack of storage and an export route, officials told Reuters.

Qatar, the biggest liquefied natural gas producer in the Gulf, declared force majeure on gas exports on Wednesday, with sources saying a return to normal production volumes may take at least a month.

Two oil traders said they held bullish expectations for oil prices as a quick resolution to this war seemed unlikely.

At least 200 ships, including oil and liquefied natural gas tankers as well as cargo ships, remained at anchor in open waters off the coast of major Gulf producers including Iraq, Saudi Arabia and Qatar, according to Reuters estimates based on ship-tracking data from the MarineTraffic platform.

Hundreds of other vessels remained outside Hormuz unable to reach ports, shipping data showed. The waterway is a key artery for around a fifth of the world’s oil and LNG supply.

China’s government has asked companies to suspend signing new contracts to export refined fuel and to try to cancel shipments already committed, industry and trade sources said on Thursday.

Reporting by Katya Golubkova in Tokyo and Siyi Liu in Singapore; Editing by Clarence Fernandez, Jacqueine Wong and Tom Hogue

In an interview with radio broadcaster RTL 102.5, Meloni also reiterated Italy was in favour of freezing the ETS carbon-permit scheme to soften energy bills across the European Union

International News via Reuters:

Italy is ready to hike taxes on companies that take undue benefits from the rise in gas prices triggered by the Middle East crisis, Prime Minister Giorgia Meloni said on Thursday.

In an interview with radio broadcaster RTL 102.5, Meloni also reiterated Italy was in favour of freezing the ETS carbon-permit scheme to soften energy bills across the European Union.

“We will do everything we can to stop speculation. I am ready to react, if necessary, even by raising taxes on companies that may speculate on prices through energy bills,” Meloni said.

Her remarks come just a few days after Italy increased its IRAP corporate tax on energy firms to help fund an aid package for families and businesses, in a move that would yield state coffers around 1 billion euros ($1.16 billion) through 2028.

EU leaders are assessing ways to curb volatility in the EU carbon market, as part of a revision of the market planned for later this year.

Meloni said the ETS scheme should be reviewed to avoid affecting companies producing energy from renewable sources.

The Emissions Trading System (ETS), which is the EU’s most important climate-change policy, forces power plants and industries to buy CO2 permits when they pollute – and caps the number of permits in the market – to curtail emissions over time.

“We have always called for the cost of ETS to be separated from the pricing of renewable energies such as hydroelectric and solar power, in order to lower energy costs,” Meloni said.

Italy, however, triggered widespread criticism last month for adopting a reimbursement scheme benefitting thermoelectric producers, with green energy advocates saying the move would favour fossil-fuel-based producers.

($1 = 0.8617 euros)

Reporting by Claudia Cristoferi and Giuseppe Fonte, Editing by Alexandra Hudson

Perched between China and India, the country of 30 million people has been plagued for decades by political instability, crippling a largely agrarian economy and worsening unemployment

International News via Reuters:

Nearly six months after a wave of unprecedented youth-led protests and the deaths of 77 people forced Nepal’s then prime minister to quit, people began voting on Thursday in a general election that will choose a new parliament in the Himalayan nation.

Perched between China and India, the country of 30 million people has been plagued for decades by political instability, crippling a largely agrarian economy and worsening unemployment – structural issues compounded by rampant corruption.

The long-festering malaise erupted into street demonstrations last September, triggered by a social media ban, that brought thousands on the streets, leading to clashes and fatalities that forced the resignation of Prime Minister K.P. Sharma Oli. 

On Thursday, voters flocked to schools, temples and ancient courtyards that have been converted into polling booths across the country, with some braving the morning chill in the capital Kathmandu to vote early.

Voting started at 7 a.m. local time (0115 GMT) and will close at 5 p.m., with counting scheduled to start soon after, according to the country’s election commission.

Officials said more than 300,000 security personnel, including the military, had been deployed to ensure peaceful voting in the more than 23,000 pooling booths across the country.

Oli, who leads the moderate Communist Party of Nepal (Unified Marxist-Leninist, UML), is once again in the fray, along with more than 3,400 other candidates from 65 parties.

They include the country’s oldest party, the Nepali Congress led by 49-year-old Gagan Thapa, and the Nepali Communist Party (NCP) comprising former Maoist insurgents who joined mainstream politics. 

Together with UML, these parties have dominated Nepali politics for the last three decades, although the country has seen 32 government changes in the past 35 years.

But the frontrunner for these polls is the three-year-old Rastriya Swatantra Party (RSP), which has fielded the charismatic rapper-turned-politician Balendra Shah as its prime ministerial candidate.

The 35-year-old former mayor of Nepal’s capital Kathmandu is drawing large crowds, connecting with legions of young voters clamouring for change on the ground and online, even as he takes on Oli, 74, on his home turf in the Jhapa constituency along the Indian border.

JOBS, CORRUPTION, MAIN ISSUES

In Jhapa, Menuka Chauhan,70, standing in line for more than 40 minutes at a polling booth, said she was worried about her son who was working in Qatar as a security guard, as tensions in the Middle East escalated.

“I can’t sleep at night. I worry all the time. My son tells me bombs keep dropping there. I wish there were employment opportunities here,” she said.

Promises of jobs, reining in corruption and improving governance – all demands raised during the September protests – have dominated much of the election campaign.

“The election is critical to address the aspirations of the youths expressed during the Gen Z protests,” said political analyst Puranjan Acharya.

“If the newly elected leaders are seen as unfit to do so, there is a risk of further trouble.”

Some 19 million voters are eligible to cast their ballot for 275 members of parliament through a mixed electoral system – 165 seats in direct first-past-the-post elections and 110 through proportional representation.

Early trends are likely to emerge by Friday but complete results could take a week or more as counting of proportional representation votes would take time, election commission officials said.

“Voting is not just about sending someone to victory,” Interim Prime Minister Sushila Karki, who took over after Oli, said in a public broadcast this week.

“It’s a decision you make about your future and that of your children.”

Reporting by Gopal Sharma and Sahana Bajracharya , Writing by Devjyot Ghoshal and Shilpa Jamkhandikar; Editing by Raju Gopalakrishnan