European investment banks stutter as Wall Street rivals power ahead

European investment banks are losing ground to U.S. rivals as regulatory changes, deeper U.S. capital markets and larger pools of deployable capital give Wall Street firms a competitive edge. Q1 results from BNP Paribas, Deutsche Bank and others showed weak or flat trading and advisory revenue, while U.S. names including JPMorgan and Morgan Stanley posted record sales, helped by market volatility from the Iran war. Data from LSEG show Europe’s share of global investment banking fees slid to c.21% in 2025 (20% in Q1), versus the U.S. at 54% in Q1. Proposed U.S. Basel III/GSIB rule changes could lower capital requirements by about 4.8%, further widening the gap. The story implies downside pressure on European banking franchises and, by extension, European equity indices tied to financials.