HSBC, Deutsche Bank among European banks most exposed to corporate crypto payments, RBC analysts say

HSBC, Deutsche Bank Face Highest Exposure to Corporate Crypto Payments in Europe

European Banks and the Impact of Corporate Crypto Payments

By Elizabeth Howcroft

PARIS, April 16 (Reuters) - European banks with bigger corporate cash management businesses, including HSBC and Deutsche Bank, could be among the most impacted if companies start using crypto to manage their money, according to RBC Capital Markets analysts. 

Banks that do not understand digital assets risk their margins being squeezed and losing clients, although the growth of digital assets also offers lenders new revenue opportunities, the analysts said in a note to clients published on Wednesday.

Analyst Insights on Digital Assets and Banking

Here's what the analysts said:

Survey Results and Use Cases

• RBC Capital Markets analysts surveyed 18 European banks, and 72% of the banks surveyed said cross-border payments was the main near-term use case
• Corporate payments is the use case for digital money that is "nearest to market"

Revenue Risks and Bank Exposure

• Depending on the growth in digital money, highly exposed banks could lose up to 7% of revenue. The analysts cite risks including rising funding costs and falling fee income
• HSBC and Deutsche Bank are the most exposed, with corporate payments making up 10% or more of their group revenues
• BNP Paribas also has a large corporate payments business, but less material as a proportion of its overall group.

Bank Attitudes Toward Digital Assets

• Still, 83% of respondents do not see digital assets as a core offering or a substitute for services they already offer
• More than half the banks (67%) said demand for stablecoins was limited
• All of the banks said stablecoins' current impact on liquidity and treasury management was "negligible"

Growth Strategies and Industry Collaboration

• Banks are seeking to grow their crypto businesses, and lenders including Deutsche Bank, Barclays and BNP Paribas are participating in bank-led stablecoin groups

(Reporting by Elizabeth Howcroft; Editing by Tommy Reggiori Wilkes and Janane Venkatraman)