Credit Suisse Leads European Investment Banking Recovery, Says S&P

Credit Suisse is the best-positioned of the three European investment banking giants (UBS, Credit Suisse and Deutsche Bank) in the wake of the financial crisis, according to new research on the European banking sector by Standard & Poor’s (S&P) Equity Research. S&P expects a combination of strong capital levels and an experienced management team to drive further market share gains.

In addition to Credit Suisse, cost efficiency is a key attribute of Banco Santander, and S&P Equity Research believes BNP Paribas’ funding position is strong in the context of sovereign risk and the likely trajectory of interest rates

Regionally, S&P’s research suggests that Spanish banks tend to be particularly structurally efficient; in their view an attribute, given the uncertain outlook for the other drivers of banks’ profitability.

Most European banks now expect a rise in central banks’ interest rates to ease the pressure on their deposit margins, but historical trends indicate variations in how European banks’ net interest income has responded to changes in interest rates.

Sovereign risk is at the forefront, from individual investors to governments. S&P Equity Research believes increased sovereign risk could ratchet up pressure on banks’ net interest income, in the worst-case scenario triggering another liquidity crunch similar to that of 2007-08.


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