The latest ranking of EU banks shows balance sheets and capital have shrunk for most on the back of a weakening euro, while Spanish banks managed to increase their profitability and specialised banks emerged with the highest returns. 

Top-250-EU-banks-ranking-2015--euro-depreciation-leaves-its-mark1

With nearly $64bn more in Tier 1 capital than its closest runner-up, HSBC continues to sit atop the European banks ranking, although its capital and assets dropped slightly, by 3.42% and 1.39%, respectively.

This slide was echoed across a large number of the region’s other banks. In the aggregate ranking, total assets shrunk by 6.17%, while Tier 1 capital dropped by 6.91%. Regulators nudged banks to trim excessive bulk as economic growth on the continent remained feeble and the euro lost more than 11% of its value against the dollar.

Only three countries saw an increase in both assets and capital – Cyprus, where banks were still in the process of recapitalisation, and Malta and Latvia.

Still, capital grew for a few of the top players. Second placed Crédit Agricole advanced two positions as it shored up its capital by 2.98%, bringing it to $88.77bn. However, the bank finished the year leaner, with a 9.1% reduction in total assets.

Crédit Agricole’s rise up the rankings came at the expense of its French competitor BNP Paribas, which was relegated to the third spot, experiencing a 13.87% drop in Tier 1 capital. Barclays experienced a 11.68% decrease in its capital base and as a consequence moved down one position to fourth.

The situation was similar for the other two UK banks in the top 10 – at RBS, capital and assets dropped by 11.63% and 3.2%, respectively, and the bank slipped one spot to seventh position. At Lloyds, the 1.74% drop in capital was less precipitous, which helped it advance to eighth position.

Top 250 EU banks ranking 2015 - euro depreciation leaves its mark

Société Générale grew its capital by 1.96%, accompanied by a decrease in total assets of 6.82%. This helped the bank secure an entry in the top 10, as Italian lender UniCredit dropped to 11th position due to a 6.33% decline in its Tier 1 capital.

Gain in Spain

Spanish banks put in some of the strongest performances in this year’s ranking. While aggregate profits declined in most countries, Spanish lenders posted a gain of 84.28%. The two largest conglomerates, Santander and BBVA, performed particularly well, posting profit increases of 22.73% and 201.88%, respectively.

Notably, two smaller Spanish lenders, Banco Mare Nostrum and Unicaja Banco, also posted impressive profit increases of 686.37% and 499.54%, respectively. These were some of the highest increases in the region and at Unicaja Banco this rise in profitability came on the back of a 42.95% capital expansion, as the bank acquired the ailing Banco Ceiss in March 2014.

Focus pays off

Many of the performance tables are populated with highly specialised banking institutions. These banks are especially prevalent in the cost-to-income table. Nederlandse Waterschapsbank, a Dutch bank which provides funding to the public sector, has a cost-to-income ratio of only 13.86%, the lowest in the rankings.

French lender Electro Banque, part of the Alcatel Lucent group, focuses on providing financial services to its parent and ranks second in terms of cost to income. It is also highly profitable, having the fourth highest return on assets in the rankings. The bank bolstered its Tier 1 capital by 63.24%, the fourth highest increase in the ranking, while the first spot in that category is occupied by another bank belonging to an industrial group, Siemens Bank, which grew its capital by 113.31%. 

Banca Farmafactoring, which provides financing to the Italian public healthcare system, is another instance of a highly profitable business that is cheap to run – the bank had the highest return on capital in the EU and third lowest cost-to-income ratio. 

The Banker's Top 250 EU banks ranking, 2015 originally appeared in the September 2015 issue of the magazine. The full results of the ranking are available on The Banker DatabaseFind out more about the database, register for a free trial or subscribe today.

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