Santander office building in London.
Luke McGregor | Bloomberg via Getty Images
Spanish lender Banco Santander overturns Swiss giant UBS as the largest bank in the continent due to its market capitalization, as US tariffs are rippling through the region’s damaged banking sector.
UBS, which fell deeply after the April 2 announcement of President Donald Trump’s baseline and mutual obligations to Washington’s trading partner, had a market capitalization of 79.5 Swiss francs ($9.723 billion) on Wednesday.
According to LSEG data, stocks in the two banks have been transferred over the past few months, with Swiss lenders cutting 17.2% by 17.2% annually, while Banco Santander has acquired nearly 35%.
Both banks, along with the broader European banking sector, have been struggling since the imposition of the White House protectionist trade policy, given the tariff-hit European countries’ outlook for growth and the recession in the US.
Washington imposed a 20% tariff on imports from the European Union, but reduced it to 10% in a 90-day suspension announced by Trump on April 9th.
Switzerland, which is not a member of the EU, faces a sudden 31% collection after a suspension lift, threatening the Trump administration’s additional obligations on imported drugs. This hit the Swiss pharmaceutical industry, “growing robustly and “contributed significantly” to the country’s exports over the period.
More broadly, European Union banks received a boost from the announcement of the European Union’s REIRM initiative in March.
US exposure
The two biggest lenders in continental Europe have very different exposures to the US market.
Banco Santander is the fifth largest car lender in the country and has expanded through its recent partnership with Telecom Giant Verizon. Nevertheless, it only recorded around 9% of the 2024 state’s total profit.
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European Bank
Meanwhile, the US is a key market for UBS’s lucrative core global wealth management division, with about half of Swiss lenders’ investment assets concentrated in the broader US region last year, according to its annual report.
UBS’s outlook is also clouded by new features from Swiss authorities and a covering of uncertainty surrounding steep capital requirements. This expanded by absorbing the collapsed domestic Peer Credit Switzerland, and from there took over the important US presence. Lenders will be making more clarified next month these guidelines.
UBS’s profitability could also be affected by the strong Swiss franc (historically safe shelter assets amid the market turmoil), which has valued around 8% against the US dollar since the latest tariff levy.
The Swiss valuation currency — which local trade groups had flagged as damaging exports even before the tariffs came into effect — can see that in addition to the depression of the country, the Swiss National Bank had already cut its rating to just 0.25% in March.
In comparison, the European Central Bank is also widely expected to cut its major deposit facility fees by quarter when it meets later on Thursday, which will result in 2.25%.
Potential interest rate cuts will be made after the ECB said in March that monetary policy is “meaningly less restrictive.” This is some of the analysts who are interpreted as indicating a restraint in regards to lower rates.
A decline in national interest usually weighs the net interest income of local lenders from loans.
