Investors decided to kick off Wednesday with a big sell off in banking stocks with troubled Swiss name Credit Suisse [NYSE:CS] dropping over 30% in early trading. There is definite focus on the banking sector in Europe in the wake of the US bail out of depositors in Silicon Valley Bank and the additional failure of Signature Bank in New York in Friday. The ghost of Lehman Brothers seems to be stalking some trading floors.
We decided to run a screen of European banks using Bridgewise data and focusing on larger banks with a market cap of at least EUR1bn. We wanted to see which were already looking poor for a fundamentals perspective, and which investors might be justified in getting out of. These are also names which are not measuring up to the average health of the European banking sector.
First off is Van Lanschot Kempen NV, the Dutch bank. Its last set of financials were looking very poor and we are doubtful of its ability to generate consistent growth for investors. The market cap has actually sunk below EUR 1bn to trade at around EUR 874m. The bank is more of an investment manager than a systemic financial hub like Credit Suisse. Shares in Van Lanschot Kempen sold off this morning and are currently at EUR 26. The stock has been doing well over the last six months and is up 27% over that period, but investors have been less convinced lately. It has been struggling to get over EUR 29 and with the latest banking woes we are not sure it will get much further.
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In Portugal Banco Comercial Portugues SA is also looking in poor shape despite a USD 3.3bn market cap. Shares dropped over 7% this morning but they were down 14% over the last five trading sessions. A rally in the price now looks severely interrupted, breaking a trend which saw the stock accumulate a decent 31%+ for investors over six months. We don't like the negative showing on the bank's book value from the last set of results, although it does have some other strong balance sheet metrics - e.g. positive trend line in cash and cash metrics. We don't think it is in poor shape financially, but the -22% change in the price to book value has to concern investors.
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