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The United States Dominates Global Investment Banking
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The United States Dominates Global Investment Banking

Does It Matter to Europe?

Charles Goodhart and Dirk Schoenmaker
Bruegel, 2016
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8

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Recommendation

Europe’s once-robust investment banking sector has relinquished significant turf to Wall Street in recent years. This may worry some Europeans, but professors Charles Goodhart and Dirk Schoenmaker see little cause for concern. They argue that the five big US banks will continue to engage in cutthroat competition with one another and with their Chinese rivals, and that European authorities still will hold some sway over the US banks.getAbstract recommends this report to bankers, policy makers and investors seeking insight into Europe’s shifting place in the world.

Summary

Hemmed in by ever-stricter regulations and capital requirements, European investment banks are shrinking from the global scene. As a result, the five big US banks – Goldman Sachs, Morgan Stanley, JP Morgan, Citigroup and Bank of America Merrill Lynch – have taken sole possession of the top tier in global investment banking. US capital markets are the largest in the world, so it stands to reason that US investment banks are dominant.

Europe’s major financial institutions, such as Deutsche Bank, Barclays, Rothschild and HSBC, are in the second tier but remain important to European...

About the Authors

Charles Goodhart is an emeritus professor at the London School of Economics. Dirk Schoenmaker is a senior fellow at Bruegel and a professor of banking and finance at Erasmus University.

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