Photographer: Jason Alden/Bloomberg

BNP Is Europe’s Most Profitable Bank in U.S., UBS Top by Revenue

  • Deutsche Bank’s $354 billion in U.S. assets leads peers
  • Foreign investment banks revealed figures under new Fed rule

BNP Paribas SA’s U.S. business was the most profitable among European investment banks in the first nine months of the year, according to first-ever filings by the firms required by U.S. regulators.

The U.S. units of BNP Paribas, France’s largest bank, made a pretax profit of $958 million on revenue of $3.87 billion, according to the disclosures Tuesday. The firms were asked by the Federal Reserve to consolidate all their U.S. businesses under a holding company starting in July. U.S. branches of the parent bank aren’t included.

Credit Suisse Group AG said it lost money in the U.S. in the same period because of restructuring costs. While most of the biggest European banks have been revamping their business, regional booking of costs differs by company.

UBS Group AG had a $1.4 billion U.S. profit, almost all from tax credits. Pretax income was only $123 million. Zurich-based UBS has more than $20 billion of such credits because of losses incurred during the 2008 financial crisis.

Deutsche Bank AG’s U.S. profit according to the filings exceeded the Frankfurt-based company’s total profit for the first nine months. The U.S. figures include intragroup transactions that might distort its profitability compared with other regional units, a person familiar with the accounts said. Those intragroup profits and losses are canceled out during the consolidation of all businesses in the firm’s global income statement.

Deutsche Bank had the most U.S. assets among the group, based on the latest data available, including assets of branches kept out of the holding companies under the new Fed rules. That still represented a 34 percent reduction from the end of 2011, when Deutsche Bank last filed a similar consolidated report.

European investment banks have been rationalizing their trading operations worldwide in the face of decreased profitability. They can book certain activities in their branches, such as derivatives trades or large corporate lending. While those are kept out of minimum capital and liquidity calculations, the new rule requires the firms to establish U.S. risk committees that oversee all operations in the country including the branches.

European banks have criticized the Fed regulations for trapping capital in the U.S. The consolidated U.S. units must abide by minimum capital and liquidity ratios, which the banks didn’t have to meet in the past. That means global firms can’t move resources to where they’re needed most. The Fed has said it imposed the rule to avoid a repeat of the 2008 financial crisis, when it provided trillions of dollars in funding to foreign banks.

— With assistance by Vogeli Voegeli, and Nicholas Comfort

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