Can Europe’s Investment Bankers Get Their Groove Back?

(Bloomberg Opinion) — Deutsche Bank AG Chief Executive Officer Christian Sewing was talking his own book in 2022 when he warned that Europe needs strong banks to counteract US and Chinese competitors: “Losing financial sovereignty for Europe would be just as bad as the energy dependence that is causing us so much pain.” But his words resonate loudly today as Donald Trump displays his antagonism toward the transatlantic ties that have helped the US dominate global finance. 

Last week, Swiss lawmakers debated stripping State Street Corp. of its role as custodian of $52 billion of pension assets amid fears Trump could order the firm to withhold payments as a bargaining chip to pressure Switzerland. The motion was defeated by 98 votes to 89 after the intervention of the Swiss government, which advised that terminating the contract inside its five-year term could have negative repercussions for the Swiss financial center. But the issue highlights the new headwinds US banks face in Europe.

It used to be that every country had its national champion. Even after Goldman Sachs Group Inc. arrived in Frankfurt in 1990, bringing its expertise in capital markets and M&A advisory, local banks remained essential partners in major deals. The firm’s breakthrough transaction, the privatization of Deutsche Telekom, was led jointly with Deutsche Bank and Dresdner Bank. By 2009, Goldman was the top foreign investment bank in Germany by revenue, yet, overall, it continued to lag Deutsche Bank.

That all changed during the 2010s when European lenders began to scale back their investment-banking ambitions. In the 10 years through September 2024, US banks bulked up their market share of global investment-banking revenue to 70% from 55%, according to data from Coalition Greenwich. Confronted by tougher regulation and strong competition, European firms gradually withdrew. Deutsche Bank exited equities in 2019; UBS Group AG shuttered large parts of the Credit Suisse business it acquired in 2023; and, more recently, HSBC Holdings Plc announced that it will pull back from equity capital markets and M&A everywhere outside Asia and the Middle East.

This has left US banks with free rein even in Europe. Last year, American firms commandeered four of the top five spots in both European M&A and European equity underwriting, according to Dealogic. When Porsche AG came to the market in 2022 as the largest initial public offering on the continent in a decade, the transaction was led by Bank of America Corp., Citigroup Inc., Goldman Sachs and JPMorgan Chase & Co.

Not all European banks have retreated. BNP Paribas SA has built significant market share by picking up the pieces others left behind. When Deutsche Bank exited equities, the French bank acquired its prime brokerage business. When Credit Suisse faltered, it made some strategic hires. In each of the past two years the French institution has ranked first in European debt capital markets, a position it retained through the first months of 2025. So far this year, it has also moved into second place in European equity underwriting, a position last year held by Goldman Sachs. “With corporate & institutional banking, the group possesses a high-value-added platform and a powerful growth engine that continues to gain market share,” Chief Executive Officer Jean-Laurent Bonnafé told investors last month.

The top-ranked bank in Europe may be beginning to worry as officials introduce plans to raise hundreds of billions to bolster their militaries and infrastructure. Ranked number two in M&A and debt capital markets and number one in equity capital markets last year, JPMorgan has a strong foothold. But “if we tear the world apart – I call it the economic battlefield – in trade, pricing, you know, us against Europe, us against China – yeah, we’re going to have an issue,” Chief Executive Officer Jamie Dimon told graduate students this month. “America First is fine. America alone – if we end up alone because you know, we’re tearing the world asunder – we will have made a mistake.”

As European growth improves and its markets catch up with those of the US, the opportunity for banks on the continent is clear. If corporations are encouraged to shop local, HSBC may come to rue closing its business so suddenly, and BNP Paribas will be well placed. American firms aren’t going anywhere, but their market share may have peaked.

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Marc Rubinstein is a former hedge fund manager. He is author of the weekly finance newsletter Net Interest.

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