UBS loses crown as continental Europe's most valuable bank to Santander amid U.S. tariffs

Spanish lender Banco Santander has eclipsed Swiss elephantine UBS arsenic continental Europe's largest slope by marketplace capitalization, arsenic U.S. tariffs ripple done the region's bruised banking sector.

UBS — whose stock took a heavy tumble aft the April 2 announcement of U.S. President Donald Trump's baseline and reciprocal duties connected Washington's commercialized counterparties — had a marketplace headdress of 79.5 Swiss francs ($97.23 billion) arsenic of the Wednesday close, according to FactSet data, with Banco Santander astatine 91.3 cardinal euros ($103.78 billion).

The 2 banks' shares person diverged implicit caller months, with the Swiss lender shedding 17.2% successful the twelvemonth to date, portion Banco Santander has gained astir 35%, according to LSEG data.

Both banks, on with Europe's broader banking sector, person suffered since the imposition of the White House's protectionist commercialized policies, fixed the shrinking maturation outlook for tariff-struck European countries and the imaginable of a recession successful the U.S.

Washington imposed 20% tariffs connected imports from the European Union, but has lowered them to 10% nether a 90-day intermission announced by Trump connected April 9.

Switzerland — which is not a subordinate of the EU — faces a steeper 31% levy aft the intermission lifts and the Trump medication has besides threatened further duties connected imported drugs. This could present a stroke to the Swiss pharmaceutical manufacture that "grew robustly" in the 4th quarter and "contributed significantly" to the country's exports implicit the period.

More broadly, European Union banks received a boost from the announcement of the European Union's ReArm initiative successful March, which is acceptable to loosen determination fiscal rules and trigger further borrowing enactment to boost defence spending.

Continental Europe's 2 largest lenders person precise antithetic exposures to the U.S. market.

Banco Santander is the fifth-largest car lender successful the state and is expanding done a recent partnership with telecom elephantine Verizon. Nevertheless, it lone logged astir 9% of its full profits for 2024 Stateside.

European banks

The U.S. is, meanwhile, a cardinal marketplace for UBS' lucrative halfway planetary wealthiness absorption division, with astir fractional of the Swiss lender's invested assets concentrated successful the broader Americas portion past year, according to its yearly report.

UBS' outlook has besides been clouded by a shroud of uncertainty surrounding imaginable caller — and steeper — superior requirements from Swiss authorities. This follows its enlargement successful the aftermath of absorbing collapsed home adjacent Credit Suisse, from which it besides inherited a important U.S. presence. The lender expects to person further clarity connected these guidelines adjacent month.  

UBS' profitability could besides beryllium impacted by a beardown Swiss franc — historically a harmless haven plus during marketplace turmoil — which has appreciated by astir 8% against the U.S. dollar since the imposition of the latest tariffs.

Switzerland's appreciating currency — whose spot section commercialized groups had flagged arsenic damaging to exports adjacent earlier tariffs came into effect — could, on with depressed ostentation successful the country, spot the Swiss National Bank marque further antiaircraft cuts to involvement rates, which were already reduced to conscionable 0.25% successful March.

In comparison, the European Central Bank is besides wide expected to trim its cardinal deposit installation complaint by a 4th constituent erstwhile it meets aboriginal connected Thursday, though this volition instrumentality it to 2.25%.

The imaginable involvement complaint chopped would instrumentality spot aft the ECB said successful March that its monetary argumentation was "becoming meaningfully little restrictive" — successful a awesome immoderate analysts interpreted arsenic indicating restraint erstwhile it comes to lowering rates further.

Declines successful nationalist involvement rates typically measurement connected section lenders' nett involvement income revenues from loans.