- What's Kept Stock Rally Going? Fear, Not Confidence
- Fed to Keep Rates Low Despite Dollar's Fall: Bernanke
- Buffett's Berkshire Hathaway Boosts Wal-Mart Stake
- Millions Could Have to Repay Part of Obama's Tax Credit
- Hollywood Turns to Porn as Unemployment Rises
- Slideshow: US Cities With Most Underwater Mortgages
- Solar Energy Emerges From a Dark Period
- Gold Is in a 'Bubble' And Will Keep Going Higher: Gartman
- Stanford Receiver to Release Funds Of Frozen Acounts
- Warren Buffett's Berkshire Hathaway Almost Doubles Wal-Mart Holdings During Summer
- Nov. 16: Unusual Volume Leaders
- Getting To The Heart Of The Merck-Abbott Embargo Break
- What MGM's Sale Could Say About Value of Content
- My Ratings on Lowe's & Home Depot: Analyst
- S&P Stocks Trading at New 52-Week Highs
- Snoop Dogg Talks Biz
- Paulson Funds Report Q3 Performance
- Warren Buffett's Berkshire Portfolio Snapshot Coming Later Today
MOST SHARED
- Stocks Overvalued, Recession Will Return: Meredith Whitney
- Has Twitter's Finest Hours (Seconds) Come and Gone?
- Fed Likely to Keep Rates Low Despite Dollar's Fall: Bernanke
- U.S. May Wind Up Green With Envy
- Bernanke Offers Something For Everyone
- Millions May Have to Repay Part of Obama Tax Credit
- Underwater Mortgages Could Sink Even Deeper
- U.S. Cities With The Most Underwater Mortgages
- What's Kept the Rally Going? Investor Fear, Not Confidence
- Hollywood Turns to Porn as Unemployment Rises
Text Size 
Bullish comments from the Qatari investment fund over the future of European banks show a return of confidence in the depressed sector and may herald the beginning of an era of buying opportunities, analysts told CNBC Monday.
The fund is planning to invest between $10 billion and $15 billion over the next two years in banks and prefers the European ones to their US counterparts, Qatar’s Prime Minister Sheikh Hamad bin Jassim al-Thani told Reuters.
"Let's face it, the banks are extremely depressed right now … the reality is that they can only really go up," Ralph Silva, research director from TowerGroup, told "European Power Lunch."
European banking stocks rallied Monday, with the UK's Alliance & Leister soaring 8.8 percent and Royal Bank of Scotland gaining over 5 percent. France's Credit Agricole and Germany's Commerzbank also jumped.
The sector has been heavily sold off since last summer, when subprime-related losses started to filter through to balance sheets.
The EuroStoxx Banking Index has lost a quarter of its value since the start of June, meaning that investors can obtain far more stocks for their capital now compared to six months ago, but fear of further falls has kept many on the sidelines.
Shaken but Not Stirred
One reason to expect upside in the European banks is their ability to manage writedowns reasonably, Simon Adamson, analyst from CreditSights, told CNBC.com.
"The market has underestimated the resilience of a lot of European banks … we had some large writedowons and impairment changes, most of the banks have been able to absorb them with relatively little damage," Adamson said.
But it's still too early to say the worst is over, Adamson warned, and 2008 is still going to be a very tough year for banking.
Writedowns have been rife in the recent reporting season for the likes of UBS, Barclays and Societe Generale, and this has amplified uncertainly about the banks' prospects.
Echoing the Qatari SWF's opinion, analysts said U.S. banks are still too laden with losses from the housing market collapse to be considered ready for investment.
Print
Email
- Where, what, how.
- CNBC's Jim Goldman asks: Has the sun begun to set on Twitter? Data suggests its best days are over.
- Everyone wanted a piece of Madoff's "Bullship"--the famous buoy sold for $7,500 at auction. You won't believe these prices.
- De Loach Vineyards is selling its pinot noir the old fashioned way, helping to cut energy and transportation costs.
- Why are the Chinese concerned about the progress of U.S. health care legislation?
- CNBC's Maria Bartiromo talks to rapper Snoop Dogg about brand identity in both business and music.
Data is a real-time snapshot *Data is delayed at least 15 minutes