US banks muscle in on the European midmarket
They already dominate the investment banking business in Europe, and now the leading US banks have their eyes on an even bigger prize. They see their vast investments in the digital technology transforming payments and transaction services and their retained global presences as the keys to winning even greater revenues from Europe’s midsize corporates.
Euromoney is pressing the chief executive of one of Europe’s biggest banks on its capacity to grow fee revenues this year to compensate for the fall in net interest income that will inevitably follow European Central Bank rate cuts.
Deftly, he turns the discussion to the travails of his peer at another large European lender.
Its shares are still trading at an alarmingly wide discount to tangible net asset value, even after a good run for European bank stocks on the back of rising rates and fat net interest margins. Costs are up, revenues are flat. Even loyal and long-standing investors are agitating behind the scenes for a strategic reset.
What does he think has gone wrong there?
“They have still not given up their ambitions in global investment banking, which is something we did many years ago when it became obvious that the US banks had won that battle,” the CEO says, suggesting that failing to cut back is an obvious mistake.
The core of our pitch is that if customers consolidate all that onto our platforms, they can see their entire global and local cash positions all in one place
“To compete successfully in any form of banking requires scale, but you can only achieve that in select geographies and businesses," he says.