ECB steps up scrutiny of European banks’ AI industry exposure

[LONDON] The European Central Bank (ECB) is delving into the risks faced by banks in the region from the artificial intelligence (AI) industry, amid heightened concerns over hidden credit exposures and financial-sector disruption.

The Frankfurt-based central bank is asking a small number of individual lenders for more details on their lending to areas including data centres, said sources.

In parallel, the regulator is running targeted workshops to identify how banks are using generative AI. The sources asked not to be named as the matter is not public. An ECB spokesperson declined to comment.

The increased attention by the central bank on AI risks underlines how global regulators are aware of the potential for the technology to upend the banking sector, from transforming the business of investment advice to managing its historic need for financing.

Banks and private credit firms globally have been pouring trillions of dollars into the AI build-out, which spans development companies, data centres and energy supply.

The workshops focus on aspects such as business models, governance and risk management. At least one lender understood the ECB’s attention as a need for caution on lending to sectors including data centres, said one source. 

The project pre-dates the most recent bout of turbulence related to the AI build-out on Feb 16, when there were declines in stocks of money managers with exposure to private credit.

The ECB said in 2025 that the way banks use AI applications would be a priority for its bank supervisors from 2026 to 2028, and that it would run “workshops” on the topic.

More broadly, the central bank and other authorities have expanded previous efforts to ask banks about their dependence on technology companies, other sources added.

SEE ALSO

ECB fines JPMorgan’s European arm 12.2 million euros for misreporting capital requirements

Eurozone business activity up on German manufacturing revival

ECB’s Lagarde receives 140,000 euros from Bank for International Settlements

They would, for example, ask what would be done if a cloud service provider or data centre was no longer available at short notice, said sources. In such situations, they noted, data recovery and back-ups would be particularly relevant plans to have.

AI adoption will expose the European lenders to even greater systemic threats from their reliance on foreign tech giants, the Netherlands’ top financial regulator warned in an interview in 2025.

However, the ECB is also asking about the potential benefits that such technology presents for individual banks, noted a source.

At least one firm is working on mapping its exposure to AI firms. A banker working there said the exercise is complex because not only loans to AI firms and data centres were considered, but also other links like those to their electricity suppliers.

February’s stocks of firms offering wealth-management services were sold off as investors were worried that large parts of the industry could be automated in the future.

The shares of other companies, including those in insurance and software, plummeted in February due to speculation around the perceived threat that AI poses. BLOOMBERG