Big banks = bad banks?

A couple of weeks ago, a reader of a note on ING asked why we were bothering with such a small, insignificant bank.
Actually, ING is neither. It has a market capitalisation of €39bn. That makes it Europe’s ninth largest bank by that measure — bigger than Credit Suisse, Deutsche Bank and Italy’s two largest banks.

Here, then, is a list of Europe’s 20 largest banks by market capitalisation in euros:

And for completeness, here is an alternative ranking:


HSBC dominates both lists. But away from that the make-up is very different. While the big glitzy names (Barclays, Deutsche Bank et al) dominate the second list organised by assets, it is the more plain vanilla commercial and retail banks (Santander, Lloyds, BBVA) at the top of the first. Other than HSBC, only BNP Paribas appears in the top five of both lists.

This is another demonstration of how little equity investors value investment banks. Yes, they might employ the smartest guys in the room, but can they (or will they) create shareholder value? Hence investors have been buying into the likes of Lloyds, while UBS and Barclays have been cutting back their investment banking operations.

One final list. Here is a list of those banks that appear in both of the previous lists, ranked by market capitalisation as a percentage of assets. Just look at those names at the bottom.