Why U.S. Banks Strengthened EMEA Fee Dominance Amid EU’s Tariff Hopes

European investment banks entered 2025 under the expectation that U.S. tariffs—such as the baseline 10% (and in some cases 20%) duties announced on April 2—would shift business toward domestic lenders as EU corporates and governments sought alternatives to Wall Street [1][5][9]. However, multiple sources show that this shift did not materialize at scale. Instead, U.S. banks maintained or even increased their fee share in the Europe, Middle East and Africa (EMEA) region, reaching approximately 37%—just shy of their all-time high near 40%—and gained market share in M&A and equity underwriting [1][3]. European banks lost ground in equity offerings while the U.S. names leveraged their dominant positions in large-ticket deals and scale advantages overseas [1][3].

In terms of revenue streams, European banks’ performance was bifurcated. According to S&P Global and Visible Alpha data, advisory and equity underwriting revenues deteriorated during the first half of the year due to elevated uncertainty tied to tariff policy, interest rates, and economic growth prospects [11]. In contrast, debt underwriting remained relatively stable or even positive for some banks—Deutsche Bank being a notable exception among Europe’s largest houses, owing to its strong debt origination business [11]. Trading revenues were also a bright spot: UBS, Societe Générale, and Barclays reported year-over-year gains in their markets businesses, with trading gaining in fixed income and equities driven by tariff-induced market volatility [16]. Still, for most European banks, the upside failed to offset losses in underwriting and advisory segments [3][11].

Macro risks loom large. Tariff measures announced in early April triggered adjective downgrades in growth outlooks. ING pushed eurozone GDP forecasts down to ~0.6% for 2025 (from higher consensus estimates), ABN Amro, Bank of America, and Goldman Sachs corroborated this softer trajectory, projecting 2025 growth under 1% [2][5]. Inflation impacts are mixed: prices may rise in short term via trade retaliation and exchange rate depreciation, but persistent growth weakness and reduced demand could keep inflation at or near ECB’s 2% target or below [2]. These headwinds threaten loan quality, margin compression (esp. if ECB eases), and increased provisions for European banks with high exposure to sectors heavily tied to U.S. exports and tariffs (manufacturing, machinery, chemicals) [9].

At the strategic level, European investment banks face structural disadvantages: less scale, tighter capital constraints, slower restructuring, and reputational/familiarity advantages that favor U.S. banks among cross-border clients. While there are signs of home-market loyalty, customers still relied on U.S. banks for marquee transactions. Also, European bankers report pipelines only delayed, not cancelled, but uncertainty has lengthened deal cycles and pushed engagements into later quarters [11]. Over time, this could drive strategic repositioning, consolidation, or renewed focus on specific product lines or geographies.