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JP Morgan targets mid-sized firms in challenge to European banks

Reuters  |  PARIS/NEW YORK 

By Landauro and David Henry

PARIS/(Reuters) - Thumbing through a thick binder detailing European mid-sized and family-owned firms, JP Morgan's has his sights set on a Europe's banks have kept to themselves.

"This list is heavily curated, handpicked," Petno, the New York-based of JP Morgan's commercial segment, told of the 1,500 companies it wants to become clients.

The owners of these firms are often already wealth management customers and JP Morgan's Petno is now looking to offer their businesses loans, cash management, and other services.

JP Morgan's challenge to the European banks in their traditional stronghold is another example of the U.S. using its clout to try to take from competitors, after holding up much better than many during the financial crisis.

is now targeting companies in France, Germany, Italy, the Netherlands, and Britain, with roughly $500 million to $2 billion in annual revenue from recognized brands and long-established business, plus international aspirations.

Some already have businesses in the and use there, while many are known by its European investment bankers while out on the hunt for deals. The move comes as shifts dozens of bankers to Paris to adapt to Brexit.

Petno's prospect list was two years in the making and built by those responsible for JP Morgan's affairs in each country.

While it will take time to win clients and recruit staff, Petno is convinced that JP Morgan can build a sustainable in similar to its commercial in the United States, which last year produced $8.6 billion of revenue.

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Petno declined to reveal his goals, but JP Morgan's expansion comes as corporate lending is a rare bright spot for Europe's banks amid rock-bottom interest rates and weak growth.

In the first half of this year, the four top investment banks in ranked by the size of the deals they have advised on are U.S. banks, data from shows.

A combination of price cuts, product range and additional marketing have won share in European capital markets, U.S. credit cards, commercial lending, and in recent years.

But Francois-Xavier Deucher, Fitch Ratings' in Paris, said it won't be easy for a without a to make headway in

"The profitable part of the business lies in services like cash management, rates or forex hedging, advisory, insurance or employee savings plans," Deucher said.

"On export financing and on support on international markets, JP Morgan could have a competitive advantage," he said.

With $2.6 trillion in assets, about a quarter of which are outside North America, JPMorgan's balance sheet is much larger than Europe's biggest banks. Its $24 billion net profit dwarfed BNP Paribas' 7.8 billion euro net profit in 2017.

Profit last year at and Banco Santander, continental Europe's second and fourth largest banks by assets, were 6.5 billion euros and 6.6 billion euros, while Deutsche Bank's was 1.3 billion euros.

(Reporting by Landauro in Paris and in New York; Editing by Alexander Smith)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, December 05 2018. 19:43 IST
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