Vanguard is reportedly testing a platform to compete with banks in the $6 trillion-a-day currency market

  • Vanguard Group is testing a blockchain-powered platform that would allow asset managers to trade currencies without using major banks as intermediariesBloomberg reported Thursday.
  • The currency market handles $6 trillion each day, and is currently dominated by firms like JPMorgan Chase and Citi.
  • Vanguard’s platform would skirt the banks’ fees through peer-to-peer trading, and has already handled a few trades, a source told Bloomberg.
  • Visit the Markets Insider homepage for more stories.

Vanguard Group is testing a blockchain-powered platform for asset managers to trade currencies, Bloomberg reported Thursday.

An entry into the sector from Vanguard could bring long-sought change to the bank-dominated currency market. The investing giant already disrupted the finance world by introducing low-cost index funds to the masses.

The currency market handles $6 trillion a day, according to Bloomberg, and requires banks like JPMorgan Chase and Citi to execute trades.

Asset managers currently rely on banks as intermediaries for currency trades, even after buy-side companies began matching trades on electronic services in the 2000s. The system being tested by Vanguard would sidestep the traditional players and their fees, Bloomberg reported.

The investing giant’s service has been working for two months and has already handled some trades, a source told Bloomberg. The platform uses the same blockchain technology behind bitcoin to match trades, and could cut trade expenses if enough users join the service.

“In theory, it sounds great because you can reduce your costs if you can match directly with someone else who has a countervailing interest,” Campbell Adams, a former Deutsche Bank senior currency trader and the founder of ParFX, told Bloomberg. However, such a platform “will require a critical mass of users” if it wants to bring a discount advantage to the massive sector, he added.

The investment advisor has previously hinted at efforts to compete in peer-to-peer trading. Andy Maack, Vanguard’s global head of foreign exchange trading, told The Trade there’s a “tremendous amount of interest in the potential for disintermediation.”

Peer-to-peer trade matching “is pretty intriguing, especially for the foreign exchange markets which only really started to seriously explore this topic in recent months,” he added in the September interview.

The company didn’t comment further on plans for the platform, but noted its interest in currency hedging and lowering “the cost of investing for all investors.”

“Vanguard is currently piloting a project focused on improving the efficiency and reducing risk of FX hedging,” Vanguard spokesperson Carolyn Wegemann said in a statement to Business Insider. “Given the project is still in the pilot stage, we can’t comment further.”

Vanguard has more than $5 trillion in worldwide assets and is the world’s largest provider of mutual funds. It also provides exchange-traded funds that track major stock indexes.

American Paganism

It’s not what the Religious Right thinks it is.

Claims of moral decline are a perennial feature of conservative rhetoric. But in recent years, pro-Trump Christians have emphasized a new reason to be afraid. The United States, they say, is devolving into such wanton “paganism” that the country may not survive. The true America awaits rescue by the Christian faithful, and in such an existential struggle, nearly any means are justified—even reelecting a morally abhorrent president.

Examples of this rhetoric are not in short supply, among pundits and even in more scholarly work. In an essay praising Donald Trump’s “animal instinct” for “order” and “social cohesion,” Sohrab Ahmari opposed an America of “traditional Christianity” to one of “libertine ways and paganized ideology.” These are our only choices, he insisted. Between such incompatible enemies, there can be only “war and enmity,” so true believers should be ready to sacrifice civility in the battles ahead to reconquer the public squareRod Dreher has speculated that Trump, while unpalatable, could be a divine emissary holding back the horrors of Christian persecution, like the biblical figure of He Who Delays the Antichrist, an implicit nod to old pagan enemies. “If Christians like me vote for Trump in 2020,” Dreher warns, “it is only because of his role as katechon in restraining what is far worse.” Though in a calmer tone, Ross Douthat entertained similar ideas in his column “The Return of Paganism,” wondering if the pantheist tendencies in American civil religion could morph into a neo-paganism hostile to Christian faith.

Douthat cites a recent book by law professor Steven D. Smith, Pagans & Christians in the City: Culture Wars from the Tiber to the Potomac. According to Smith, what we know as “secularismis actually ancient paganism in modern guise. Since paganism is inherently anti-Christian, this means Christians should oppose both secular politics and secular universities at any cost. They are not fighting against a neutral arbiter, but against the wiles of pagan Rome redivivus, a strain of this-worldly sexualized spirituality nearly eradicated by Christianity, but now mutated and all the more lethal.

Smith is only the most recent Christian author to invoke the specter of paganism. R. R. Reno, the editor of First Things, wrote Resurrecting the Idea of a Christian Society on the eve of the 2016 election, apparently anticipating a Clinton victory. The book’s title alludes to T. S. Eliot’s 1938 essay on “The Idea of a Christian Society,” in which Eliot condemns the rise of “modern paganism.” Reno told his readers to view 2016 in light of 1938. “Would the West seek a Christian future or a pagan one?” he asked. “We face a similar decision today. Will we seek to live in accord with the idea of a Christian society, or will we accept the tutelage of a pagan society?” Yuval Levin called Reno’s book a “call to arms against a postmodern paganism.”

This charge of looming paganism exerts a twofold political function. First, it

  1. rationalizes Trumpism, casting our situation as a state of emergency that threatens the survival of U.S. Christians.
  2. Second, the sacrilege of pagan religion prevents Trump’s supporters from indulging in political moderation by making that seem like a form of apostasy. It’s probably not a coincidence that “paganism” is on the rise just as Christian conservatives decide whether to support the current administration in an election year. It is challenging to explain how Trump’s policies are Christian. It is far easier to label his opponents as pagans, and thus align the president with Christianity by default. But there are fundamental problems with the conservative narrative of a resurgent paganism.

In the first place, the term “paganism” only works in this maneuver because it is vague and perspectival. It always has been, ever since Christians invented it. Ancient Christians stuck the name on those who continued the traditional rites of Greco-Roman religion rather than adopt the true faith. Indeed the largely urban Christians meant it as a mild pejorative for the rural country bumpkins, the pagani, who lived far from imperial centers and persisted in their benighted worship of the old gods. In our terms, the first “pagans” lived in flyover country and clung to their traditional religion. 

Since “pagan” has come to mean “un-Christian,” every invocation of “pagan” brings with it an implicit understanding of “Christian.” The meaning of the former is parasitic on the latter. Misunderstanding the essence of paganism, therefore, also means misunderstanding the demands of Christianity, and vice versa.

More left-leaning Christians might well agree with Smith and Reno in one sense: there is indeed an ascendant paganism afoot in our country today. It threatens the social and moral fabric of American public life and contends directly against the voice of Christian truth. One can brook no compromise in resisting it. The difference comes in how that paganism is defined. The debate is not whether paganism is real, but where it lives, how it appears, and what it does. If conservatives have mistaken its location, they might be training their weapons in the wrong direction.

Much hangs, then, on accurately discerning the meaning of “modern paganism.” Let us consider three proposals: Steven Smith’s recent version, T. S. Eliot’s original version, and another timely version from First Things.

Christians were the most conspicuous defenders of divine immanence in the ancient world. It was pagans who derided Christians for violating the self-evident truths of divine transcendence.

Steven Smith suggests that secularism is not a neutral space, but conceals its own religious identity, which is essentially pagan. It venerates the sacred within the natural world, knows only the cycle of birth and death, and thus celebrates a libertine sexuality. As opposed to Abrahamic religions that affirm the “transcendent sacred,” paganisms old and new prefer the “immanent sacred.” Smith delves into the emergence of Christians in the Roman Empire and vividly evokes the oddity of Christianity in the ancient world, heeding the scholarship of Peter Brown, Jan Assmann, and Kyle Harper (but Edward Gibbon most of all). Smith then applies his ancient model to American constitutional law and finds it confirms conservative positions on religious freedom, public symbols, and sexual norms.

But there are serious problems with Smith’s argument. Since the 1970s, scholars of religion have largely retired the vague categories formerly used to organize speculation about comparative religions—sacred and secular, immanent and transcendent, holy and profane, this-worldly and other-worldly. Major religious traditions are massive and multifarious in the ways they sustain rituals, ethics, and beliefs. Their communities cut across languages, continents, empires, and epochs, teeming with exceptions and discontinuities. The blunt tools applied by Smith are simply not up to the task of uncovering the essence of one religion, let alone two or three, and they are certainly not able to trace the notoriously complicated history of the “secular.”

For the sake of argument, though, let us grant Smith his chosen terms, and even focus on his central claim, that Christianity can lead the way in challenging modern secularity, since it insists on the “transcendent sacred” in a way that secular paganism does not. Smith’s proposal rests upon a fundamental analogy: paganism is to Christianity as immanence is to transcendence. Christians pray to the God beyond the world; pagans encounter divinity inside the weft of nature.

Even a cursory knowledge of Christianity is enough to refute this analogy. It is true that Judaism teaches the absolute transcendence of the one God, as do Islamic theologians today, and as did Neoplatonist pagan philosophers in antiquity who sought a divine One beyond every thought, word, and image. By contrast, orthodox Christians claim that God arrived and now eternally resides within the fabric of nature, as the Creator enters into creation in the body of Jesus Christ. To cite Smith’s definition of “paganism,” it is Christianity, in fact, that “refers to a religious orientation that locates the sacred within this world.” The Christian belief in the Incarnation is nothing if not a belief in the “immanent sacred.”

The new Christian movement distinguished itself from Greek philosophy, Roman cults, and Jewish faith alike by affirming an extensive and peculiar list of divine incursions into immanence: the Incarnation of God in the body of Jesus; Anne’s immaculate conception of Mary; Mary’s virginal conception and vaginal birth of the Son of God, making her Theotokos; the real flesh of Jesus suffering on the cross, against the Gnostics (Tertullian); the real presence of Jesus in the Eucharistic bread and wine, also against the Gnostics; the Resurrection of the body after death; the bodily assumption of Mary; the martyrdom of the body as bloody birth into heaven (Perpetua) or as the grinding of flesh into bread (Ignatius of Antioch); the church birthed through the bleeding side wound of a dying Jesus; the church as maternal breast suckling the Christian with milk; the union of Christ and Christians as the exemplar of which sexual union is the image (Ephesians 5, Origen of Alexandria). Above all, the scandalous immanence that might have sounded pagan to Jesus’s disciples: “Unless you eat the flesh of the Son of Man and drink his blood, you do not have life within you” (John 6). The enemy of these traditional Christian teachings is not sacred immanence, but rather a gnosticism that dematerializes and disembodies the real presence of God within creation.

The radically immanent sacred of Christians scandalized the Romans. As Ramsay MacMullen observes, Christians worshipping a new transcendent deity would have passed unremarked. But the Christian belief that Jesus was neither prophet nor sage but a fleshly God would have been mocked by pagan intellectuals as a risible error. The late New Testament scholar Larry Hurtado writes: “In the philosophical traditions, an ultimate and radically transcendent deity was often postulated, but you did not typically engage that transcendent deity directly.… But there was a still more unusual and, in the eyes of pagan sophisticates, outlandish Christian notion: the one, true, august God who transcended all things and had no need of anything, nevertheless, had deigned to create this world and, a still more remarkable notion, also now actively sought the redemption and reconciliation of individuals.” For pagan intellectuals, Hurtado concludes, “all this was, quite simply, preposterous.”

For instance, in his work On the True Doctrine (178 CE), the pagan philosopher Celsus is ready to accept that God exists, creates all things, and transcends nature. But in shades of Sam Harris or Richard Dawkins, Celsus laughs away the claim that God was incarnated in Jesus, or that the body could be resurrected. “I mean, what sort of body is it that could return to its original nature or become the same as it was before it rotted away?” he mocks. “And of course they have no reply for this one, and as in most cases where there is no reply they take cover by saying ‘Nothing is impossible with God.’ A brilliant answer indeed! But the fact is, God cannot do what is contrary to nature.”

Christian philosophers saw the divide similarly. Tertullian admits that pagan philosophers might even discern that God exists by their own lights. But they always miss that God descended into a virgin and was made flesh in her womb. Augustine reports that he learned from the pagan philosopher Plotinus that the Logos was transcendent—but only Christians taught him how the Logos embraced the human body in all of its weakness and vulnerability, and its awful exposure to the whims of imperial violence.

To put it bluntly: paganism cannot simply mean divine immanence. On the contrary, Christians were the most conspicuous defenders of that principle in the ancient world. It was pagans who derided Christians for violating the self-evident truths of divine transcendence.

The resemblances between the modern paganism feared by T.S. Eliot in 1938 and conservative politics in 2020 are uncanny.

A better starting point for defining “paganism” is T. S. Eliot’s essay “The Idea of a Christian Society,” written in the dark days of 1938, where he proposes that the greatest enemy of modern Christianity is “modern paganism.” Reno and Smith alike summon Eliot as a sober authority in perilous times, but neither presents Eliot’s own account of the term in question. So how did Eliot define paganism? It’s important to stay as close as possible to his own words.

First, Eliot says paganism embraces an authoritarian politics that confuses religion and nationhood. The “distinguishing mark” of a Christian society, Eliot writes, is its productive “tension” between church and state, but pagan society seeks to “fuse” them. Pagan culture “de-Christianises” individuals gradually and unwittingly, as authoritarianism creeps in. Soon, he warns, one’s hymns are no longer to God alone, but also to the dear leader.

Second, Eliot says that modern paganism incites ecological destruction. The Christian lives in harmony with nature; the pagan destroys public resources for private profit. “Unregulated industrialism” and “the exhaustion of natural resources,” writes Eliot, lead to “the exploitation of the earth, on a vast scale.” In a formulation that strikingly anticipates Laudato si’, he puts it succinctly: “A wrong attitude towards nature implies, somewhere, a wrong attitude towards God.

Third, modern paganism imposes a puritanical public morality. It promotes, in Eliot’s words, “regimentation and conformity, without respect for the needs of the individual soul” and “the puritanism of a hygienic morality in the interest of efficiency.” According to Eliot, in fact, modern paganism will even attempt to elevate the status of Christian identity in society. But paganism embraces Christianity not because it’s true, but because it consolidates the nation and discourages dissent. He notes that authoritarians have always celebrated public morality. They want, in a way, more morality, even if their priorities are haphazardly formulated. Eliot warns that such a moralistic Christianity is not only a perversion of the faith: “It is not enthusiasm, but dogma, that differentiates a Christian from a pagan society.” Such versions of Christianity might even “engender nothing better than a disguised and peculiarly sanctimonious nationalism, accelerating our progress toward the paganism which we say we abhor.”

The resemblances between the modern paganism feared by Eliot in 1938 and conservative politics in 2020 are uncanny. The “paganism” that future Christians will need to identify and resist, he warned, will appear as

  • unrestrained capitalist greed; as
  • authoritarianism seeking to weaken democratic norms; as
  • callous environmental degradation; as a
  • superficial Christian moralism seeking to fuse church and state; and as a
  • petty “sanctimonious nationalism.” 

In the poignant final paragraph of his essay, Eliot confesses that the churning political surprises of the 1930s had left him shaken, not only because of the events themselves, but in the revelation of his own country’s moral poverty. In the face of Britain’s failure to mount an adequate response to modern pagan violence, Eliot felt a justified “humiliation” that demanded of him “personal contrition” along with “repentance, and amendment.” He felt “deeply implicated and responsible” and began to question his country’s frequent claims to moral authority. When Eliot enjoins his readers to fight against modern paganism, it is specifically because its brew of authoritarianism and capitalism were already beginning to charm Christian intellectuals who should know better. Eliot’s final sentences prick the conscience today:

We could not match conviction with conviction, we had no ideas with which we could either meet or oppose the ideas opposed to us. Was our society, which had always been so assured of its superiority and rectitude, so confident of its unexamined premises, assembled round anything more permanent than a congeries of banks, insurance companies and industries, and had it any beliefs more essential than a belief in compound interest and the maintenance of dividends? Such thoughts as these formed the starting point, and must remain the excuse, for saying what I have to say.

The paganism we should fear is not secularism, sacred immanence, or pantheist naturalism. It is power celebrating its violence, perceiving the world empty of everything save the contest of will.

But there was at least one other account of paganism in the pages of First Things as Trump campaigned for the presidency—this time from Matthew Schmitz, an editor at the magazine. Over the summer of 2016, Schmitz displayed an admirable prescience while Christian conservatives were still hesitating to endorse the eventual Republican nominee. The “faith taught by Christ,” he wrote, “is a religion of losers. To the weak and humble, it offers a stripped and humiliated Lord.… In Trump, it [Christian faith] has curdled into pagan disdain.”

Schmitz’s analyses from April and August of 2016 really must be considered at length, given where they were published. Take this representative passage:

At a campaign event in Iowa, Trump shocked the audience by saying that he had never asked God for forgiveness. All his other disturbing statements—his attacks on every vulnerable group—are made intelligible by this one…. Human frailty, dependency, and sinfulness cannot be acknowledged; they must be overcome. This opens up the possibility of great cruelty toward those who cannot wish themselves into being winners. A man who need not ask forgiveness need never forgive others. He does not realize his own weakness, and so he mocks and reviles every sign of weakness in his ­fellow men.

And here’s another:

In his contempt for losers, he [Trump] embodies one of the most unchristian ideals ever advanced in American politics. With a unique consistency and vehemence, he expresses his hatred of weakness. He ridicules the disabled, attacks women, and defends abortionists. This is the opposite of Christianity, which puts the weak first and exalts every loser…. Liberalism, much as I hate it, has preserved this Christian inheritance. The GOP before Trump, despite all its contempt for the 47 percent, was leavened by the influence of sincere Christians and so was never so sneering. Trump is an altogether more pagan figure.

By 2019, however, in the wake of the midterm battles over immigration and the mythic “caravan” of refugees at the southern border, Schmitz joined others to cheer on the “new nationalism” that Trump promoted at his rallies. Within a few months, Schmitz had decided that Christianity and liberalism could never be reconciled, since modern society—wait for it—had become paganized. “The Church,” he now saw, “is at odds with an increasingly pagan culture.”

If there was an ancient paganism of sacred immanence, it was soon outstripped by the more radical immanence of Christians in their claims of an Incarnation, a Resurrection, and above all the enduring food of the Eucharist. In every Mass the priest washes his hands in imitation of the pagan Pilate, but now as an act of humility and celebration. The  Catholic repeats as her own the words of the pagan centurion—Lord, I am not worthy—but now as an intimate prayer on the threshold of Communion. That version of paganism was overtaken and dissolved from within by the Christian sacralization of the body.

But there is another paganism that has survived into the present, and has emerged so vividly in contemporary politics that even First Things in 2016 could not miss it. This is not the paganism of immanence, but the paganism of cruelty and violence. It mocks the vulnerable, reviles the weak, and gains strength through hatred. We don’t have to look too far to discover the “postmodern paganism” threatening American Christianity today. 

Last summer the Trump administration argued in court that more than two thousand migrant and refugee children should be separated from their parents, concentrated in crude detention camps with minimal supervision, and locked in chilled rooms with the lights left on all night. The administration has yet to condemn the petty cruelty of some camp guards and instead has mused that such violence might be politically useful. Hundreds of children as young as two are deliberately denied diapers, soap, and toothbrushes for months at a time to punish their parents. Community donations of the same are turned away. Young women are denied tampons. Young children are denied inexpensive flu vaccines, and if they contract a terminal cancer, they are deported without medical care. Chickenpox and shingles are common. Federal contractors win upwards of $700 per day for each imprisoned child. Seven children have died in custody to date, and many more have been hospitalized. Doctors worry they cannot serve in the camps without violating the Hippocratic oath. The camps themselves were continued from the Obama administration, but the withdrawal of basic necessities is Trump’s innovation. What is this if not the very paganism conservatives decry?

This modern paganism ultimately means the nihilistic exercise of power for its own sake, especially power over weak and vulnerable bodies. In its purest form, it is expressed as conspicuous cruelty, both to render one’s power maximally visible and to increase that power by engendering fear. The cruelty is the point. This is the joyful paganism that Nietzsche sought to revive as the Wille zur Macht, retrieving from ancient Rome the glorious pleasure in cruelty that rewards the strong who exercise their strength. This is the reason Italian fascist Julius Evola hated Christianity for its compassion for the poor and weak.

We find this paganism exposed in the ancient world as well, in the Athenian mockery and massacre of the Melians in Thucydides’s History of the Peloponnesian War, in Thrasymachus’s authoritarian attacks on Socrates in Plato’s Republic, or in Augustine’s shrewd deconstruction of imperial power in The City of God against the Pagans. John Milbank calls this Nietzschean worldview an ontology of eternal violence opposed to an Augustinian counter-ontology of eternal peace. As Schmitz himself suggests, the perfect example of pagan disdain for vulnerability and conspicuous cruelty is the Roman practice of public crucifixion. Pagan is to Christian not as immanent is to transcendent, but as Rome is to the Crucified—a cruel empire to its tortured victims.

But modern paganism can also assume subtler forms, whenever the common good is reduced to ruthless economic competition, confirming Eliot’s fears that we have no values more essential than our “belief in compound interest and the maintenance of dividends.” The paganism we should fear is not secularism, sacred immanence, or pantheist naturalism. It is power celebrating its violence, perceiving the world empty of everything save the contest of wills, a nihilism ruled by the libido dominandi.

This paganism views moral responsibility as a fool’s errand for the weak, since all that matters is to dominate or be dominated. It sacralizes the emperor as an agent of God, scorns truth, despises the weak, and tortures the vulnerable. And it cloaks its nihilism, to cite Eliot once again, in “a disguised and peculiarly sanctimonious nationalism, accelerating our progress toward the paganism which we say we abhor.”

How U.S. Banks Took Over the World

A decade ago, they almost brought down the global financial system. Now they rule it.

When two of Europe’s corporate titans sat down to negotiate a merger this year, they called American banks.

Fiat Chrysler Automobiles hired Goldman Sachs Group Inc. as its lead adviser. France’s Renault SA hired a boutique bank stacked with Goldman alumni. In a deal that would reshape Europe’s auto industry, the continental banks that had sustained Fiat and Renault for more than a century were muscled aside by a pair of Wall Street deal makers.

A decade after fueling a crisis that nearly brought down the global financial system, America’s banks are ruling it. They earned 62% of global investment-banking fees last year, up from 53% in 2011, according to Coalition, an industry data provider. Last year, U.S. banks took home $7 of every $10 in merger fees, $6 of every $10 in stock commissions, and $6 of every $10 paid to hold and move corporate cash.

urope’s banks are smaller, less profitable and beating a hasty retreat from Wall Street.

From their central perch in London and with close ties to developing countries, Europe’s banks were primed to benefit as financial services went global. They charged onto Wall Street in the 1990s and pressed their advantage as U.S. banks limped out of the 2008 crisis.

Then, “they handed the whole system on a platter to the Americans,” said Colm Kelleher, the Irish-born former Morgan Stanley executive.

Coming out of the crisis, U.S. banks quickly raised capital and shed risk, unpleasant tasks that Europeans put off. American businesses recovered quickly, and its consumers are eager to borrow and spend. A tax cut in 2018 boosted profits. Interest rates have risen.

Meanwhile in Europe, regional economies are sputtering and borrowing has slowed.

Central bankers have cut interest rates below zero, which leaves banks struggling to eke out a profit on loans. Banking policy in Europe remains fractured, with national and continental regulators pursuing often conflicting agendas.

“It is not our remit to promote national, or even European, champions,” said Andrea Enria, the European Central Bank’s top banking regulator.

Twenty-five years ago, European banks charged into the U.S. They bought storied firms like Donaldson, Lufkin & Jenrette and Wasserstein Perella and dangled big paydays for rainmakers. When Deutsche Bank announced a $10 billion takeover of Bankers Trust in 1998, it promised at least $400 million in bonuses to retain top bankers.

The challenges of merging a conservative European commercial lender and a U.S. derivatives shop gave competitors pause. Goldman’s CEO, Hank Paulson, shared his doubts with a hotel ballroom of his bankers: Deutsche Bank “just signed up for 10 years of pain,” attendees remember him saying.

Henry Paulson is sworn in as Treasury secretary by Supreme Court Chief Justice John Roberts in 2006. Before he headed the Treasury, he ran Goldman Sachs. PHOTO: JIM YOUNG/REUTERS

But in an era of cheap debt and light regulation, the land grab seemed to pay off. Deutsche Bank had a $3 trillion balance sheet in 2007 and that year earned twice as much as Bank of America Corp. in securities-trading. Royal Bank of Scotland was briefly the largest bank in the world, wielding a balance sheet bigger than Britain’s entire economy.

Even the financial crisis looked at first like an opportunity. When Barclays PLC bought Lehman Brothers in a fire sale, it got 10,000 of the firm’s U.S. bankers and few of its bad debts. On Lehman’s Times Square trading floor, the loudspeakers played “God Save The Queen.” Deutsche Bank pounced on Wall Street’s clients.

The high-water mark was in 2011, when global investment-banking fees were roughly split between European and U.S. firms.

The good times didn’t last. A 2012 sovereign-debt crisis across the continent put new pressure on the region’s biggest banks. Economic growth slowed across the continent. Central bankers turned interest rates negative in 2014. German media calls them “Strafzinsen,” translating roughly to “penalty rates.”

UBS slashed 10,000 jobs and cut big parts of its trading operation. Royal Bank of Scotland fired thousands of investment bankers and sold its U.S. retail arm to focus on the U.K. Three-quarters of the Lehman bankers Barclays picked up in 2008 were gone within five years, according to Financial Industry Regulatory Authority records.

Meanwhile, U.S. banks were quietly encroaching on European rivals’ territory. In 2009, JPMorgan completed an acquisition of Cazenove, the U.K. investment bank. Every year since 2014, JPMorgan has generated more investment-banking revenue across Europe than anyone else, according to Dealogic. (The London-listed owner of Peppa Pig, a British cartoon character, hired JPMorgan Cazenove to advise on its sale in August to U.S. toy giant Hasbro Inc. )

As U.S. banks got stronger and their European rivals weakened, client loyalties began to change.

Today’s companies are increasingly global. They make more of their money in the U.S. and have swapped a shareholder register stacked with old-line European families and trusts for the likes of BlackRock Inc. and other U.S. investment giants, where Wall Street banks are better connected. The percentage of U.K. companies’ stock owned by foreigners rose from 16% in 1994 to 53% in 2016, according to government statistics.

Fiat, the Italian car maker that pursued a tie-up with France’s Renault this year, makes two-thirds of its money in the U.S.,  where it owns Chrysler. Its shots are called by John Elkann, the New York-born scion of the family that founded Fiat in 1899.

One of Mr. Elkann’s closest advisers is a Goldman Sachs banker who for the past 15 years has organized a yearly gathering of European billionaire business owners, according to people who have attended. They swap stories, share advice and, more often than not, hire Goldman for deals.

Globalization has cost the Europeans not just on headline-grabbing mergers, but in the everyday business of managing money for clients. Deliveroo, a food-delivery startup based in the U.K., sought to ramp up in Europe and the Middle East. Instead of hiring local banks in each market, it consolidated its money flows with Citigroup , which has local licenses in 98 countries and a global digital platform.

JPMorgan has made a big push to expand transaction banking for European clients. In 2010 it established a new unit of global bankers to pitch day-to-day transaction services to big companies, and later took over dozens of European transaction relationships from RBS.

UBS’s Stamford, Conn., trading floor in 2005. It was able to accommodate 1,400 traders and staff. PHOTO: RICK FRIEDMAN/CORBIS/GETTY IMAGES

Most recently JPMorgan said it is extending its commercial banking business globally, targeting hundreds of midsize businesses across Europe. It has sought to take on a more local flavoring, doing things like sponsoring math-and-science programs for students in France, Germany and Italy.

Last year, Citigroup and JPMorgan were two of the three biggest providers of day-to-day transaction banking globally, along with Britain’s HSBC Holdings PLC, according to Coalition. U.S. banks accounted for 57% of the global transaction-banking revenue pool among the biggest banks in that business, versus 22% for Europeans, Coalition said.

Will A Japanese Banking Crisis Lead to Global Recession? | Recession Watch

Shannon McConaghy of Horseman Capital paints a dour picture of the Japanese banking system. He reveals the accounting tricks that have allowed these banks to survive in a predominantly negative-interest-rate world, and discusses why credit costs are finally rising. Shannon warns of a potential meltdown that could have far-reaching ramifications, in this conversation with Real Vision’s Roger Hirst. Filmed on July 11, 2019 in London.

Real Vision™ is the destination for the world’s most successful investors to share their thoughts about what’s happening in today’s markets. Think: TED Talks for Finance. On Real Vision™ you get exclusive access to watch the most successful investors, hedge fund managers and traders who share their frank and in-depth investment insights with no agenda, hype or bias. Make smart investment decisions and grow your portfolio with original content brought to you by the biggest names in finance, who get to say what they really think on Real Vision™.