Goldman Sachs notes European banks trail US peers in equities

Investing.com -- European banks showed mixed results in their second quarter investment banking operations, according to Goldman Sachs analysis of the reporting season. While investment banking revenues grew strongly across both regions, European banks fell behind their US counterparts in equities trading.

Investment banking revenues at European banks grew 34% year-over-year, beating consensus expectations by 12% on average and matching growth rates of US peers. Every major investment bank posted investment banking division revenue growth of 30% or more for the quarter. Societe Generale, UBS and Deutsche Bank highlighted major equity and debt capital markets deals.

Deutsche Bank said it expects significant year-over-year growth in the second half of the year. JP Morgan described the pipeline as quite robust with M&A transaction closures accelerating, while Citigroup called it healthy and BNP Paribas said it was strong. UBS noted the M&A market has concentrated around a small number of very large transactions, with momentum particularly strong in the mid-to-large cap segment.

European banks posted weaker FICC performance for the quarter, missing consensus by 7% on average with mixed year-over-year results. UBS underperformed due to its deliberate choice to allocate capital away from FICC towards equities, while Barclays and Deutsche Bank posted gains. American banks delivered better results, with several recording near-record quarters.

In equities, European banks grew revenues by 37% year-over-year on average, while American banks grew revenues by 67%. Societe Generale was the only bank growing at a single-digit rate of 6%, compared to BNP Paribas which grew revenues at 43%.

Goldman Sachs attributed the gap to regional mix and product mix factors. Market conditions in the Americas and Asia-Pacific were more favorable than in Europe, Middle East and Africa. US banks have greater exposure to the US market and Asia-Pacific compared to European peers.

Revenue momentum was strong across most products, with particular focus on prime brokerage and derivatives as growth engines. European banks have less exposure to prime brokerage than US peers.

European banks' market share in equities has slipped in four of the past six quarters, dropping noticeably in the second quarter of 2026. The three largest American participants are now between 2.5 times to 5 times the size of European operations in the second quarter.

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