Challenges for European Companies Create Opportunities for Corporate Banks

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Stamford, CT – The combination of macroeconomic volatility, slow economic growth, historically low interest rates, and further increasing know your customer (KYC) requirements has made for a tough market for corporate banks in Europe. However, in recent months these factors have also created valuable opportunities for banks capable of helping large companies navigate today’s difficult conditions by adjusting to market dislocations, avoiding the impact of negative rates and managing KYC provisions.

The 2020 Greenwich Share and Quality Leaders in European Large Corporate Banking are capitalising on these opportunities to forge deeper relationships with the biggest companies in the region and to create a source of revenue growth in an otherwise flat market by capturing business from rivals.

At the top of the list of this year’s winners is BNP Paribas, which leads the market in penetration among large European corporates by a wide margin, followed by HSBC and UniCredit. Citi and Deutsche Bank round out the list of winners. UniCredit takes the title of 2020 Greenwich Quality Leader in European Corporate Banking.

The same macroeconomic volatility that is cutting into global trade is triggering demand for cross-border banking services. For example, the share of large European companies using a provider for cross-border banking services within Western Europe increased to 80% in 2019 from 77% in 2018, while the share using banking services into Asia ticked up to 52% from 50%.

The biggest beneficiaries of this demand have been the biggest global banks, such as Citi, HSBC, BNP Paribas, J.P. Morgan, Bank of America, and Deutsche Bank, which often are the only providers with on-the-ground expertise and networks across all the countries in which a large company operates.

When the European Central Bank first introduced negative interest rates, large European companies were largely insulated from the impact because many banks decided to absorb the costs associated with holding cash deposits in the name of preserving client relationships. Generally, banks and companies alike expected negative rates would be a passing phase. Six year later, negative interest rates are the new normal.

As more companies are forced to incur costs associated with cash deposits, the ability to help clients avoid this new expense is emerging as a key skill for corporate banks. Companies are turning to banks with the expertise and technical skills in cash management to minimise or even eliminate any costs from negative rates. “This new environment is highlighting the capabilities of banks that have developed sophisticated, digital cash-management platforms capable of achieving the transparency and timeliness needed to zero out cash positions on an ongoing basis,” says Greenwich Associates Managing Director Dr. Tobias Miarka.