Bankers prepare for globalisation ‘reset’ in second Trump presidency

By Lawrence White and Sinead Cruise

LONDON (Reuters) -Globalisation is being reset by U.S. President-elect Donald Trump’s trade tariff threats and worries about regulatory arbitrage between Wall Street banks and their international rivals, senior bankers said on Tuesday.

Trump said last month he would impose a 25% tariff on all products from Mexico and Canada, and an additional 10% tariff on goods from China, on the first day of his second term, raising concerns about global trading relationships.

Such tariffs could disrupt supply chains but also open up opportunities for banks across Asia and the Middle East, Tanuj Kapilashrami, Chief Strategy and Talent Officer at Standard Chartered (OTC:), said in response to a question at the FT Global Banking Summit in London.

Separately, European Central Bank board member Piero Cipollone said U.S. import duties could lower economic growth and inflation in the 20 countries sharing the euro.

Some commentators have predicted a wave of financial deregulation on Wall Street during Trump’s second spell as president, adding to speculation that ‘Basel Endgame’ rules designed to shock-proof the global banking system will not be rolled out in the United States at the same pace as in Europe.

C.S. Venkatakrishnan, CEO of Britain’s Barclays (LON:) said he was still hopeful the rules would be adopted at roughly the same time, which would support the efforts of European lenders to remain competitive with their U.S. rivals.

“It’s realistic … the world has invested a lot in this,” he said, adding: “We get carried away and look at personalities, but the U.S. is a country of great and strong institutions, and it knows it has a very important role to play in the international world.”

European bank executives are concerned that the superior returns enjoyed by U.S. banks in recent years could grow yet further if Trump’s measures favour his home market.

North American banks are outpacing their European peers in revenue generation, with net interest margins of 1.8% compared to just 1.2%, research from professional services firm Alvarez & Marshal showed on Tuesday.