European banks retreat, U.S. firms dominate investment banking

European investment banks are facing challenges as major US firms gain ground in the financial sector. Deutsche Bank's CEO, Christian Sewing, highlighted the need for strong banks in Europe to compete with US and Chinese rivals. This concern has grown, especially as political tensions between Europe and the US increase. Recently, Swiss lawmakers debated the role of State Street Corp. in managing pension assets due to fears that former President Trump could use them as a bargaining tool. Although the motion to terminate their contract was defeated, it underscores the difficulties US banks may encounter in Europe. Over the years, European banks like Deutsche Bank and UBS have reduced their investment banking activities, allowing US firms to capture a larger market share. Data shows US banks now control 70% of global investment-banking revenue, up from 55% a decade ago. As European banks pull back, US firms have taken the lead in mergers and acquisitions, as well as equity underwriting in Europe. However, not all European banks are retreating. BNP Paribas has gained significant market share by acquiring businesses from others that exited the market. It has ranked highly in European debt capital markets and is gaining traction in equity underwriting as well. Looking ahead, as the European markets improve, there may be opportunities for local banks to reclaim some influence. Analysts warn that if the US continues on a path of isolation, it could hinder its long-term success in the global financial landscape.