The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.
Banking

Can European banks strike back?

European bank shares have sunk to levels not seen since 2008, and even some of the region’s bank CEOs admit it is hard to make a compelling investment case for them. Euromoney speaks to the people at the top about their potential to re-emerge as global leaders.

Rabble-Alliance-780.jpg

Illustration: Kevin February


Is there any way out of the gloom infecting Europe’s banking sector? 

With the region’s economic prospects this year gradually killing hopes for an end to negative rates and a recovery in their interest margins, the European Central Bank’s rate cut this September only confirmed the challenges ahead. It will be even harder for European banks to earn their cost of equity. 

In late 2019, the Stoxx600 index of European banks is stuck in almost the same trough it fell in to in the depths of the eurozone crisis. The ECB’s new policy of only charging for a relatively small tier of reserves did little to offset the impact of a widely expected rate cut in September. 

The vast majority of European bank stocks are now trading firmly below book value; a clear signal from the market that the sector needs to shrink. Research by financial institution specialist Algebris Investments recently lamented that the cumulative market capitalization of the top 25 European banks has slumped to roughly the same as just one big US bank: JPMorgan



You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree