UBS loses crown as continental Europe’s most respected financial institution to Santander amid U.S. price lists

Spanish lender Banco Santander has eclipsed Swiss massive UBS as continental Europe’s greatest financial institution via marketplace capitalization, as U.S. price lists ripple during the area’s bruised banking sector.

UBS — whose proportion took a deep tumble after the April 2 announcement of U.S. President Donald Trump’s baseline and reciprocal tasks on Washington’s business counterparties — had a marketplace cap of 79.5 Swiss francs ($97.23 billion) as of the Wednesday shut, consistent with FactSet information, with Banco Santander at 91.3 billion euros ($103.78 billion).

The two banks’ stocks have diverged over fresh months, with the Swiss lender dropping 17.2% within the yr so far, whilst Banco Santander has won just about 35%, consistent with LSEG information.

Both banks, along side Europe’s broader banking sector, have suffered because the imposition of the White House’s protectionist business insurance policies, given the shrinking expansion outlook for tariff-struck European nations and the chance of a recession within the U.S.

Washington imposed 20% price lists on imports from the European Union, however has decreased them to 10% underneath a 90-day pause introduced via Trump on April 9.

Switzerland — which isn’t a member of the EU — faces a steeper 31% levy after the pause lifts and the Trump management has additionally threatened further tasks on imported medication. This may just ship a blow to the Swiss pharmaceutical business that “grew robustly” within the fourth quarter and “contributed significantly” to the rustic’s exports over the duration.

More widely, European Union banks won a spice up from the announcement of the European Union’s ReArm initiative in March, which is ready to loosen regional fiscal regulations and cause additional borrowing job to spice up protection spending.

Banco Santander is the fifth-largest auto lender within the nation and is increasing thru a fresh partnership with telecom massive Verizon. Nevertheless, it best logged round 9% of its general income for 2024 Stateside.

The U.S. is, in the meantime, a key marketplace for UBS’ profitable core world wealth control department, with kind of part of the Swiss lender’s invested belongings concentrated within the broader Americas area remaining yr, consistent with its annual file.

UBS’ outlook has additionally been clouded via a shroud of uncertainty surrounding doable new — and steeper — capital necessities from Swiss government. This follows its enlargement within the wake of soaking up collapsed home peer Credit Suisse, from which it additionally inherited an important U.S. presence. The lender expects to obtain additional readability on those tips subsequent month.  

UBS’ profitability is also impacted via a robust Swiss franc — traditionally a secure haven asset right through marketplace turmoil — which has favored via kind of 8% towards the U.S. buck because the imposition of the newest price lists.

Switzerland’s appreciating foreign money — whose energy native business teams had flagged as destructive to exports even earlier than price lists got here into impact — may just, along side depressed inflation within the nation, see the Swiss National Bank make additional defensive cuts to rates of interest, which have been already decreased to only 0.25% in March.

In comparability, the European Central Bank could also be broadly anticipated to trim its key deposit facility charge via 1 / 4 level when it meets in a while Thursday, even if this may take it to 2.25%.

The doable rate of interest lower would happen after the ECB mentioned in March that its financial coverage was once “becoming meaningfully less restrictive” — in a sign some analysts interpreted as indicating restraint with regards to reducing charges additional.

Declines in nationwide rates of interest generally weigh on native lenders’ internet pastime source of revenue revenues from loans.