Having already lost global importance in the last two Top 1000 rankings, in 2017’s ranking western European banks continue to trail international peers. Tier 1 capital has fallen at 15 out of the top 25 banks in the region, compared with last year’s ranking. It leaves this year’s aggregate top 25 capitalisation $65.2bn lower than last year’s $1331.8bn – a drop that would have been even further were it not for the French banks.
All six French-owned banks have increased their capitalisation compared with our 2016 ranking and five of them have high enough Tier 1 capital to place them among the region’s largest banks. French banks have also reported the majority of profits in the region.
UK banks, meanwhile, have had a large impact on the drop in aggregate capitalisation in the region. HSBC Holdings lost 9.97% in Tier 1 capital in 2016 ($15.3bn) but still leads the western European banks by some way, and holds onto ninth position globally. RBS shed $19.3bn of Tier 1 capital and thus falls 11 positions in the Top 1000 ranking. Meanwhile, Tier 1 capital at Lloyds Banking Group fell by $9.4bn in 2016, causing it to drop 11 places in the overall ranking, while Barclays’ capitalisation came in $8.2bn down on its 2015 results, causing the bank to drop one place in the Top 1000 ranking.
It should be noted that sterling has lost some 16% of its strength compared with the dollar since our 2016 ranking. (UK headquartered HSBC, however, reports in dollars.)
The currency impact was less severe on the euro, which is only 3% lower against the dollar than in last year’s ranking. Still, Italy’s UniCredit has dropped 14 places in the Top 1000 after its capitalisation fell by some $12bn in its 2016 figures.
The weak performance of UK establishment banks has been met by a surge in challenger banks. While not within western Europe’s top 25, Metro Bank is one of the region’s highest movers, having had a £400m ($507m) equity raise. This contributed to a boost in its capitalisation by 44.79% and helped the bank move up 187 places in the Top 1000. Aldermore (805) and OneSavings Bank (993) are other newcomers in this year’s ranking.
And while Germany’s Deutsche Bank and Commerzbank continue to lose ground, DZ Bank has climbed five places to enter western Europe’s top 25, as the group added about $3.4bn of Tier 1 capital in 2016.
