Pzena, who oversees $26.4 billion in assets, manages the John Hancock Classic Value fund, which saw a 40.5 percent return in 2013.
Three things have to happen for banking stocks to reach their potential, Pzena said, including a recovery in trading volume, putting their litigation expenses behind them and a normalization of interest rates.
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If those three things occur, Citigroup could see its $4½ earnings per share climb toward $8 per share, he added.
"If those things don't happen, you sit around and you collect your 7 or 8 percent return on that book, which you're buying at a discount," he said. "And if the good things happen and rates go back to normal and volumes go back to normal and expenses come down, you've got a big upside. So, it's a really nice risk-reward trade-off."
—By CNBC's Bruno J. Navarro