Western European banks experienced much turmoil in 2022, from inflation and interest rate hikes to the threat of a recession and the unwinding of the Covid-19 pandemic support mechanisms, such as the EU’s targeted longer-term refinancing operations. Not to mention geopolitical strife.
In the coming months, the impact of some of these trends may flow through to Tier 1 capital ratios, but for now, there has been no shifting of the deck chairs at the very top of The Banker’s 2023 Tier 1 capital ranking for western Europe.
HSBC remains the largest bank by Tier 1, with $139.07bn, followed by Crédit Agricole, BNP Paribas and Banco Santander in second, third and fourth spot, respectively. Barclays dropped from fifth in 2022’s rankings to sixth spot this year, overtaken by Groupe BPCE from France.
All six banks saw dips in Tier 1 capital levels of between 3% and 12%. Much of the contraction can be attributed to a strong US dollar (except for HSBC, which reports in dollars), but the low economic growth in many countries also had a part to play in the dampened results.
The UK and France dominate the top 25, each with five institutions, followed by Spain and Switzerland with three banks each. Swiss lenders include UBS and Credit Suisse Group, which rank 11th and 12th, respectively, in the regional ranking. Interestingly, there was little Tier 1 difference between the two banks: UBS reported $58.32bn in Tier 1 capital compared to Credit Suisse’s $54.38bn.
UK challenger bank Monzo Bank has entered the Top 1000 World Banks ranking for the first time, jumping in at 885th spot, with Tier 1 capital of $767m. The bank has been dogged by profitability concerns in recent years; in 2022, it recorded a pre-tax profit loss of $159m – earning it a place in the top 15 losses by bank table this year.
Yet Monzo has also topped this year’s highest movers table for western Europe, with a 136.42% increase in Tier 1 capital. Switzerland’s Migros Bank is the second-highest mover in the region, reporting an almost 52% expansion in Tier 1 to $4.97bn.
Another new entrant to this year’s Top 1000 ranking is Swiss private bank Pictet, with Tier 1 capital of $3.68bn, which puts it in 360th spot.
