Eurozone banks retreat from US market, Deutsche Bank finds
Since the outbreak of the financial crisis in 2007, European banks have been gradually retreating from the US market, and they hold today assets equivalent to 30% of all foreign bank assets, according to research by Deutsche Bank.
At their peak in September 2007, euro-area banks held assets equivalent to 50% of all foreign bank assets. Since then, this fraction has plummeted to $973bn,” the research said.
At the same time, Canadian and Japanese banks seized the opportunity and significantly increased their presence, with assets now at $655bn.
“Canadian banks have more than doubled their pre-crisis US involvement. Japanese banks similarly increased their total assets to $487bn. Despite these changes, foreign banks’ combined share in the total US market has been relatively stable at around 23%,” Deutsche Bank said.
The research added that the surge in Canadian and Japanese activity can be attributed to their historically close links with the US and the modest impact of the financial crisis on both countries’ financial systems.
Conversely, the reduced presence of euro-area banks is hardly surprising as the entire European banking market is under substantial pressure to deleverage and re-focus on domestic markets.
“Also, with USD funding conditions remaining tight, EU banks are not only pulling out of the US but also Asian countries,” Deutsche Bank said.