07/01/2009 15:44
Citigroup included Bank of Cyprus, Marfin Popular Bank and Helenic Bank among the stocks that offer some value.
In its report, Citigroup said that “We see numerous value traps in the sector, with many banks looking cheap, yet highly vulnerable to book value destruction. This list includes SHB, SEB, Dexia, Deutsche Postbank as well as more richly valued domestic Spanish banks. We would instead buy more expensive, yet more robust, banks such as HSBC, Intesa Sanpaolo, NBG or the riskier RBS or BNP Paribas.
“Are banks cheap? Optically yes; realistically no. Despite trading at 0.9x 2009E price to tangible book, the risk of banks making retained losses and raising more capital may not be fully priced in yet”, the report said.
In its report, Citigroup said that “We see numerous value traps in the sector, with many banks looking cheap, yet highly vulnerable to book value destruction. This list includes SHB, SEB, Dexia, Deutsche Postbank as well as more richly valued domestic Spanish banks. We would instead buy more expensive, yet more robust, banks such as HSBC, Intesa Sanpaolo, NBG or the riskier RBS or BNP Paribas.
“Are banks cheap? Optically yes; realistically no. Despite trading at 0.9x 2009E price to tangible book, the risk of banks making retained losses and raising more capital may not be fully priced in yet”, the report said.
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