Europe's largest investment banks are confronting a renewed challenge to their market positions as U.S. rivals accelerate. Recent first-quarter reports from BNP Paribas, Deutsche Bank and other continental heavyweights painted a mixed picture, with some trading and advisory lines either slipping or posting only modest increases. By contrast, U.S.-based firms such as JPMorgan and Morgan Stanley recorded record sales during the period as heightened market volatility related to the Iran conflict created trading opportunities.
Although quarterly figures can swing widely and Swiss bank UBS delivered an exception - reporting a record quarter for its trading desk - the bulk of results underscore a persistent tilt in favour of Wall Street. The trend reflects a multi-year process in which U.S. banks have been able to expand their global footprint and revenue share at the expense of European rivals.
Analysts and executives point to several structural reasons for the divergence. In the aftermath of the 2008-2009 financial crisis, U.S. banks generally cleaned up balance sheets faster than many European counterparts and have since benefited from deeper, more profitable domestic capital markets that can subsidise international operations. More recently, regulatory changes in the United States have further advantaged domestic banks. Proposed adjustments to Basel III and the GSIB surcharge could lower capital requirements for U.S. banks by about 4.8%, a move characterised in the industry as a significant easing from earlier, more stringent proposals.
Barclays Chief Executive C.S. Venkatakrishnan warned last week that growing divergence in regulation will raise the competitive bar. "The further apart it goes, the greater the competitive friction we’re going to have to overcome," he said, referring to the differential between European rules and a more deregulatory U.S. regime. "We’ve done a good job overcoming it, and we’ll continue to overcome it, but it is a competitive edge that the U.S. banks get as these disparities grow," he added.
Beyond regulation, European banks have also pulled back from certain markets, reducing their footprint in places where they once competed more aggressively. That retrenchment has coincided with a longer-term decline in Europe’s share of global investment banking fees for areas such as mergers and acquisitions and capital raising. Data from LSEG show Europe’s share fell to 21% last year from 29% in 2015, while U.S. banks lifted their share to 51% from 46% over the same period. In the first quarter of this year Europe’s share dipped further to 20% - the lowest annual percentage on record since LSEG began keeping data in 2000 - while the U.S. share climbed to 54%.
Banks are not only ceding advisory and underwriting business. Market-making firms such as Citadel Securities and XTX have also captured portions of trading flow in equities and foreign exchange, compressing the revenue pool available to traditional dealers.
Company results and divisional performance
BNP Paribas reported a modest 0.8% decline in overall investment banking revenue for the quarter. Societe Generale’s investment banking arm - the bank’s largest division - saw revenue drop by 4.5%, a result driven in part by an 18% fall in fixed-income trading. Societe Generale Chief Executive Slawomir Krupa attributed the outcome to weaker client activity and volatile short-term interest rates, and said the bank’s narrower business mix left it more exposed than U.S. competitors. Citi analysts described Societe Generale’s performance as "disappointing across the board."
Deutsche Bank’s investment banking revenues were essentially flat in the quarter. Executives at the bank reported that capital markets issuance activity weakened in March but showed signs of recovery in April, while rates trading remained subdued.
Against that backdrop, Oliver Wyman estimated last year that European banks’ share of capital markets business had declined to about 32% in 2025 from roughly 41% in 2012. Coalition Greenwich data for the 2021-2025 period indicate that, by contrast, European participation in market trading revenue has been relatively stable at about 31% of combined U.S. and European trading revenue.
Outlook and strategic differences
Despite the headwinds and shrinking market share, analysts broadly forecast growth in European investment banking revenue this year, driven by market volatility and renewed dealmaking activity. Deutsche Bank, for example, upgraded its revenue outlook for its investment bank in 2026 from only modest growth to a clearer expectation of higher revenue.
UBS provided a notable counterpoint among European institutions, reporting a 27% year-on-year increase in investment bank revenue, with trading gains a significant contributor. UBS Chief Financial Officer Todd Tuckner pointed to the bank’s "capital-light approach" as a factor in its stronger showing. Many rival European firms, by contrast, remain more active in fixed-income and balance sheet-intensive financing activities - areas where U.S. banks, supported by newly freed-up capital, may be able to compete more aggressively.
The combined effect of regulatory divergence, business-mix differences and the ascent of non-bank market-makers means competition for fees and trading revenue is intensifying. For European banks, that reality is translating into continued pressure on market share and profitability in investment banking franchises.
Key takeaways
- U.S. investment banks reported stronger trading-led results in the first quarter, extending a multi-year trend of market share gains over European peers.
- Regulatory relief in the United States and deeper domestic capital markets are cited as competitive advantages for U.S. banks, while European banks contend with business-mix and footprint constraints.
- Market-making firms such as Citadel Securities and XTX have captured trading flow, further compressing revenue opportunities for traditional dealers.
Note: All figures and statements in this article are drawn from banks' reported results and industry data referenced by those institutions and industry analysts.