The broad, sharp sell off in European banks, fuelled by the plans to taxCyprus bank depositors under the country's bailout terms, could create someattractive 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 theCypriot developments, but which we believe will have very limited impact fromnegative customer depositor behaviour, should rebound well," Espirito Santo'sanalysts say in a note.
They are also still like "high quality, well-funded banks operating instrong banking jurisdictions", such as UBS, HSBC and StandardChartered.
But they reckon the Cyprus fallout will be much higher for banks inperipheral Europe, sticking to a 'sell' rating on Spain's Bankia,Banco Popular Espanol and Banco de Sabadell and saying thateven 'buy'-rated BBVA would likely find it difficult to outperform thebroader sector in the near-term.
"We see banks in peripheral Europe potentially finding it incrementally moredifficult to raise customer deposits, which could have a fundamental impact ontheir cost of funding and therefore earnings," the analysts write.
"We therefore find it difficult to see peripheral European banksoutperforming 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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Reuters messaging rm://antonina.vorobyova.thomsonreuters.com@reuters.net