JPMorgan flags lost deals as EU considers local banks over US lenders amid tariff tensions
Wall Street executives are preparing for the possibility that European governments and companies could limit their business with American lenders in response to the tariff war initiated by US President Donald Trump, according to Reuters.
More than half a dozen senior bankers and advisors told Reuters that they expect the European Union (EU) to favour domestic banks, threatening US banks' share of the European market.
Two industry groups reportedly discussed how the EU could curb US banks' activities in the region, while two major banks have held internal talks on the issue. All sources requested anonymity due to the private nature of the discussions.
A key instrument the EU could use is the Anti-Coercion Instrument (ACI), introduced in 2021 to counter the use of trade as leverage by countries such as the US and China.
The ACI allows the EU to limit foreign financial firms’ access to its markets.
Amid the tensions, French President Emmanuel Macron has urged European companies to halt planned investments in the US.
JPMorgan CEO Jamie Dimon, in an interview with Fox Business’ Mornings with Maria, said: “We’ve lost a couple of bond deals already... they simply say that, you know, we’d rather just do this with a local bank than with a US bank.”
On Wednesday, EU member states approved the bloc’s first retaliatory actions against the United States, joining Canada and China in responding to the tariff escalation.
In turn, Trump announced a temporary reduction of new tariffs on several countries, while increasing them on Chinese imports.
EU Trade Commissioner Maros Sefcovic stated the EU would consider all options, adding, “We are prepared to use every tool to protect (the) single market.”
Officials at the European Central Bank affirmed their readiness to stabilise the euro zone economy.
Though US banks hold a small portion of the EU's loans and deposits, they dominate parts of the securities trading market, including derivatives.
Since the 2008 financial crisis and especially after Brexit, Wall Street firms have expanded their operations in the EU, hiring thousands to meet regulatory demands from Brussels.
While US banks do not disclose earnings by geography, Germany, the United Kingdom, and France represent JPMorgan's largest country exposures outside the US.
According to LSEG data, JPMorgan earned about US$514m in investment banking fees in Europe in Q1 2025, capturing 8.2 percent of the total fee pool.
Fears that financial services could become a trade war weapon are not limited to US firms. European allies also worry about potential restrictions on credit card access or dollar provisions to their banks.
One source noted that companies are evaluating the risk of the US cutting off dollar funding, which could endanger the European financial system.
Last month, Reuters reported that some European officials questioned the reliability of the US Federal Reserve as a provider of dollar funding during times of market stress.
“For Europeans, it’s whether they would prefer national champions,” one person said. “The world is nationalising and there are some political risks seen with US banks.”
Although European banks generally have smaller balance sheets than their US counterparts, some clients are considering switching to local institutions.
In the securities space, one source said clients are now debating a shift to European counterparties, which had never been discussed before.
While US banks played a major role in recent deals for companies such as Volkswagen and Porsche, European advisers say local firms are now getting more deal roles.
According to one financial executive, “The advantage of the US banks is eroding.”
However, the same person added, “These emotional moments will give way to companies going back to their rational economic interests.”
Samuel Gregg of the American Institute for Economic Research cautioned that imposing limits on US financial services would hurt Europe as well.
“It would be a huge leap for Europe to try and fill the yawning gap that would ensue from placing restrictions on US financial services,” he said. “The same restrictions would also add to the damage upon European economies likely to flow from US tariff increases.”
