The broad, sharp sell off in European banks, fuelled by the plans to tax
Cyprus bank depositors under the country's bailout terms, could create some
attractive buying opportunities, with Espirito Santo highlighting Barclays
, BNP Paribas and Societe Generale.
"We believe higher beta banks whose share prices have been hit hard by the
Cypriot developments, but which we believe will have very limited impact from
negative customer depositor behaviour, should rebound well," Espirito Santo's
analysts say in a note.
They are also still like "high quality, well-funded banks operating in
strong banking jurisdictions", such as UBS, HSBC and Standard
But they reckon the Cyprus fallout will be much higher for banks in
peripheral Europe, sticking to a 'sell' rating on Spain's Bankia,
Banco Popular Espanol and Banco de Sabadell and saying that
even 'buy'-rated BBVA would likely find it difficult to outperform the
broader sector in the near-term.
"We see banks in peripheral Europe potentially finding it incrementally more
difficult to raise customer deposits, which could have a fundamental impact on
their cost of funding and therefore earnings," the analysts write.
"We therefore find it difficult to see peripheral European banks
outperforming the banks sector in the near and medium term."
The euro zone banking sector has shed 3.7 percent so far this week.
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