Citi Says European Bank Selloff Has Gone Too Far
Citi analysts say the October decline in European bank shares reflects misplaced sovereign concerns, while earnings upgrades remain possible.
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what happened
European bank valuations appear more attractive following a selloff that Citi analysts regard as unjustified, Dow Jones Newswires reports. The Stoxx Europe 600 Banks index has dropped 6% in October as concerns over sovereign exposure intensified. Citi says the decline is smaller than earlier corrections.
The bank sees room for further upward earnings revisions during third-quarter results season. Its analysts argue that sovereign worries may be misplaced because banks have materially reduced their domestic sovereign holdings. The share-price declines at Societe Generale, UniCredit, BNP Paribas and CaixaBank are described as particularly difficult to justify. Citi maintains an overweight view on the European banking sector.
why it matters
For markets, the assessment points to a possible improvement in expectations for bank earnings despite October’s sector weakness. Perceptions of sovereign risk and changes in banks’ domestic sovereign holdings remain central to the debate.
instruments
sources
- European Bank Selloff on Sovereign Fears Seems Overdone — Market Talk — Dow Jones Newswires, 12 October 2026 at 11:40 UTC
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