The fallout from the 2008 crisis will continue to make it difficult for financial stocks to perform, David Zerbos, chief market strategist with Jeffries, told CNBC Tuesday.
"You would sort of expect it to be a good time for financials in the recovery period but the government just keeps coming back and taking that pound of flesh," he said in an interview with "Squawk on the Street."
On Tuesday, Citigroup said it would be taking a $3.5 billion charge for its fourth quarter, which the bank said it is incurring for investigations and restructuring. Citigroup said all of the investigations, which are costing the bank $2.7 billion, have been previously disclosed and include Libor and foreign exchange.
While banks should do well as interest rates rise and the economy recovers, Zerbos would tread carefully when looking to invest.
"The big ones are always going to be the most dangerous," he said, noting that the Federal Reserve will be meeting this week to talk about systemic risk charges for larger institutions.
"The smaller guys, it's actually a great environment and I think there's going to be a lot of interesting stories in the small- and mid-size banking and shadow banking businesses going forward."