By Jørgen Kjærsgaard and Steve Hussey
European Banks have mostly been magnets for bad news and disappointment for their equity holders. But we believe other parts of the banks' capital structure offer solid returns, backed by resilient balance sheets.
The Problem? Poor Profitability, Not Weak Balance Sheets
European banks have been struggling to improve profitability in a persistently tough environment. Continuous low rates, a flat yield curve and low regional economic growth have proved to be a toxic trifecta for their earnings. On top of that, equity shareholders have faced a continuing stream of governance