1. Home
  2. Cash & Liquidity Management
  3. Cash & Liquidity Mngm in Europe

Greenwich Research survey suggests Deutsche Bank strengthening European corporate banking lead

The results of the Greenwich Associates conducted interviews with 3,125 financial officers (e.g., CFOs, finance directors and treasurers) at corporations and financial institutions with sales in excess of 500 million euro, including 1,625 with sales of at least 2 billion euro. Interviews were conducted throughout Belgium, Denmark, Finland, France, Germany, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom showed that:

  • the European sovereign debt crisis has created a two-tiered market in corporate banking and cash management: banks from troubled 'periphery' nations in Europe are struggling under the weight of concerns about their financial strength, while banks from the European 'core' and the UK benefit from extremely low funding rates
  • Deutsche Bank took full advantage of this situation to further cement its position as the leading corporate bank in Europe; a status that derives from its strength in corporate banking, cash management and in the area of debt capital markets, which has emerged as a critical source of capital for European companies in the post-crisis marketplace
  • 50% and 55% of all large European companies use Deutsche Bank and/or BNP Paribas for corporate banking, with both tied for first place by market penetration. They are followed by RBS and HSBC, which tie for second place with market penetration scores of 46-47%, and Citi at 41%
  • in cash management, Deutsche Bank shares the top spot with BNP Paribas and HSBC, each of which is used as a provider by 30% of large European companies. RBS and Citi round out the top five with market penetration of 28-29%.

 Debt capital markets
Greenwich research shows that Deutsche Bank is significantly ahead of its pan-European rivals in debt capital markets, where it claims 35% market penetration. HSBC and Barclays tie for second with market penetration of 28%, followed by BNP Paribas, JP Morgan and RBS, which are tied with market penetration of 23-25%.

All major European corporate banks have as their foundations strong franchises in their home-country markets. What sets the region's largest banks apart from other competitors is their ability to find success in other European countries as well. For example, BNP Paribas has established itself as a top corporate bank in Italy with 80% market penetration. The bank ranks third overall, behind only Intesa SanPaolo at 96% and UniCredit at 86%. BNP Paribas also ranks third in large corporate cash management in Spain. In the domestic Swiss market, Deutsche Bank ranks third after Credit Suisse and UBS, with two-thirds of large companies in the country using Deutsche Bank for corporate banking.

The study finds that European companies have made one main change in corporate finance practices over the past several years: They have become much bigger users of the debt capital markets. Disruptions in bank credit supply during the 2008-09 financial crisis and historically low interest rates ushered in a period of record-breaking bond issuance by European companies. While this diversification of funding sources has been a positive for European companies as a whole, the development could contribute to the further bifurcation of the region's corporate finance markets.

"With the implementation of Basel III, companies in the stronger core markets of Europe are able to use bond issues to supplement or even replace loans if bank credit becomes too expensive," says Greenwich Associates consultant Jan Lindemann. "However, companies in periphery countries, which are far more likely to face disruptions in bank credit, might not have that same flexibility, particularly those with a high exposure to their domestic economies."

Like this item? Get our Weekly Update newsletter. Subscribe today

Add a comment

New comment submissions are moderated.