Share the article
twitter-iconcopy-link-iconprint-icon
share-icon

Shift in UK and Spanish banking landscapes

Despite some concerns over the impact of regulation on profit, the big banks in western Europe have mostly held their ground. However, the aftermath of the financial crisis has seen changes in the UK and Spanish banking sectors.
Share the article
twitter-iconcopy-link-iconprint-icon
share-icon

Ongoing problems at Royal Bank of Scotland (RBS) have seen the lender slip from first to second place in the western Europe tables. The bank closed 2010 with a $1.47bn loss and a Tier 1 capital of $94bn, 24% smaller than the previous year. RBS, which had to be rescued by the UK government during the financial crisis and which is still in tax-payers’ hands, is the only bank in the top 25 western European banks to have closed the year in the red.

The region’s strongest bank is HSBC with $133.18bn in Tier 1 capital, a figure that the bank has increased by 9% since last year. HSBC’s pre-tax profits were $19bn, the largest in the region (almost three times the average value of pre-tax profits of the top 25 banks in western Europe) and a 169% growth from the 2009 results.

BNP Paribas retained third position in western Europe with a slightly improved Tier 1 capital of $91.63bn, although in the global ranking it slipped from eight position last year to 11th position this year. Often small changes make a difference, and Barclays’s 4% increase in Tier 1 capital, against a reduction of less than 1% for Santander, meant that the UK lender overtook Spain’s largest bank to take the fourth position in western Europe. BBVA – Spain’s second largest lender – has on the other hand climbed up the regional list to 14th place, three positions higher than last year. 

After the real-estate crash put a strain on savings banks, the Spanish government threatened to nationalise the weakest ‘cajas’ unless they found private sector investors and new capital before the end of 2010. This resulted in frantic capital-raising exercises. Caja de Ahorros y Monte de Piedad expanded its Tier 1 capital by 116.33% – the highest growth in the region – while La Caixa started planning its listing on the local stock exchange, due this July. The cajas’ predicament also pushed a series of mergers that reduced the number of savings banks from 45 to 17.

Banco Financiero y de Ahorros Group (which trades its lending operations under the Bankia name) emerged as the largest group among the cajas and the strongest new bank in western Europe. The group was formed in December last year through the merger of seven savings banks. The new entity’s Tier 1 capital is $23.86bn and its assets are $438.87bn. Caja Madrid was the largest lender in the group followed by Bancaja. They occupied fourth and sixth positions respectively in last year’s ranking of Spanish lenders. 

After previously having incurred losses, Groupe BPCE – formed by the merger of Groupe Banques Populaires and Groupe Caisse d’Epargne in 2009 – ING Bank, UBS and KBC Group all closed their books in the black in 2010. UBS in particular is showing a stronger capital position – Tier 1 capital is $37.58bn, almost 22% higher than the previous year – and is climbing up the regional and global rankings, moving from 19th to 18th place in western Europe and from 35th to 32nd in the Top 1000 World Banks list.

Top 25: Western Europe

Was this article helpful?

Thank you for your feedback!

Silvia Pavoni is editor in chief of The Banker. Silvia also serves as an advisory board member for the Women of the Future Programme and for the European Risk Management Council, and is part of the London council of non-profit WILL, Women in Leadership in Latin America. In 2019, she was awarded an honorary fellowship by City University of London.
Read more articles from this author