Worst Bank Stocks in the World – EU Banks Fail Stress Tests

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Bank stocks are the ultimate cyclical investment, with lending good in strong economies and bad debt and slower borrowing a problem in downturns.

community bank stocks to buyEuropean bank stocks are perhaps the biggest illustration of this right now, with major financials in the region like HSBC Holdings PLC (HSBC), Deutsche Bank AG (DB) and Barclays PLC (BCS) all down significantly this year on fears of a “triple-dip recession” for the eurozone.

So is it worth taking a flier on some of these major bank stocks now or in the next few months after they’ve been beaten down? After all, the eurozone economy has to turn around eventually … so a bargain buy could be quite profitable if your timing is right.

Of course, even if your timing is right at calling the bottom in Europe — far from an easy task — there are clear winners and losers in the region. Bank stocks are not all the same, and a recent stress test points out exactly how bad some of the major bank stocks in Europe are right now.

Worst Bank Stocks in the World – 2014 Edition

At the end of 2013, 25 eurozone bank stocks lacked the cash cushions necessary to appease European regulators after a “stress test” similar to the tactics employed by the U.S. Federal Reserve. They were ordered to shore up their balance sheets so they could weather an uncertainty, with the group showing a collective shortfall of $31.2 billion, according to The Wall Street Journal.

And the deadline to raise that money? Well, it comes in about two weeks.

So here is the list of the worst bank stocks in Europe that failed the bank tests. We’ve also asterisked the banks that have yet to recapitalize to the satisfaction of regulators — those bank stocks might not make it to the finish line in time, proving they still are at risk should the EU suffer another systemic breakdown like the debt crisis of 2009:

Austria

  • Oesterreichische Volksbanken (Being wound down)

Belgium

  • AXA Bank Europe
  • Dexia SA (Being wound down)

France

  • Caisse de Refinancement de l’Habitat

Germany

  • Muenchener Hpothekenbank

Greece and Cyprus

  • Bank of Cyprus
  • Cyprus’ Cooperative Central Bank*
  • Eurobank Ergasias
  • Hellenic Bank*
  • National Bank of Greece
  • Piraeus Bank

Ireland

  • Permanent TSB*

Italy

  • Banca Carige SpA*
  • Banca Monte dei Paschi di Siena SpA*
  • Banca Popolare dell’Emilia Romagna SC
  • Banca Popolare di Milano SCARL*
  • Banca Popolare di Sondrio SCpA
  • Banca Popolare di Vicenza ScpA*
  • Banco Popolare SC
  • Credito Valtellinese SC
  • Veneto Banca SCpA

Portugal

  • Banco Comercial Portugues SA

Slovenia

  • Nova Kreditna Banka Maribor d.d.
  • Nova Ljubljanska Banka d.d.

Spain

  • Liberbank

It’s important to note that the vast majority of these bank stocks trade on foreign exchanges and are only available directly in the U.S. via “pink sheet” stocks sold OTC. The big exception, of course, is National Bank of Greece (NBG), which has long been the focus of vulture investors in the wake of the eurozone debt crisis.

However, many investors holding mutual funds or Europe ETFs could see exposure to these bank stocks … so check your international investments carefully, and look for these ugly financials.

Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP


Article printed from InvestorPlace Media, https://investorplace.com/2014/10/worst-bank-stocks-eu-stress-test/.

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