Wall Street banks lose ground in Europe as tariffs spook clients

As US President Donald Trump has ratcheted up his rhetoric against trading partners in Europe - corporates across the continent are taking notice.

As a result, some companies have begun to diversify their banking relationships away from the giants of Wall Street, according to data compiled by Bloomberg. That's been a boon for Europe's leading banks, which have been actively vying to win the extra business.

"Some players are saying that it's better to go to European or French investment banks for advice on financing or mergers and acquisitions," said Arnaud Petit, managing director of Edmond de Rothschild's corporate finance business. Deutsche Bank AG chief executive officer Christian Sewing sees similar in potential clients' requests for proposals: "It is happening every day with client wins and RFPs and new business that we put on." So far this year, roughly half of the euro bond deals from non-US companies did not involve any of the five biggest US banks, according to data compiled by Bloomberg. That's up five percentage points from a year earlier.


For sterling bonds the gap has widened even further - Wall Street banks were shut out of just 47% of deals throughout all of last year. So far this year, though, they've been excluded from 64% of them. The emergence of the ability of a few European banks "to be able to offer competitive services and advice to clients" has created a desire among clients to switch, according to UBS Group AG chief executive Sergio Ermotti. "We believe we are well placed to continue to benefit from that diversification."

'Specific Skills'
Even before Trump's trade war kicked off in earnest, the biggest of the US banks warned that it was starting to see an impact. By April, JPMorgan Chase & Co. had already lost "a couple" of bond deals tied to the tariff uncertainty, with companies opting for local banks instead, chief executive officer Jamie Dimon said in an interview with Fox Business at the time. He warned that the tumult was "causing cumulative damage including huge anger at the United States."

The latest example of a win for non-US banks came this week, when Zurich-based insurer Chubb issued an offshore yuan-bond. It opted for Standard Chartered Plc to help take on the deal. The bank was told: "We want to bank with the regional champions, rather than just with global banks in general," Standard Chartered chief financial officer Diego de Giorgi said. "Because we think that you guys bring specific skills in a world that is fragmenting."