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Move in French banks "excessive" - Barclays



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MOVE IN FRENCH BANKS "EXCESSIVE" - BARCLAYS

Since Emmanuel Macron announced France would be holding snap elections, French banks have tumbled, and although Barclays thinks the general reaction in markets has been "fair", they say the drop in banks has been "excessive".

Uncertainty around France's fiscal situation, the possibility of windfall taxes and slowing integration within Europe have all been cited for reasons why banks have struggled.

The three main French banks - Credit Agricole, BNP Paribas and Societe Generale - have dropped between 11.3%-14.6% since the election was called on June 9, compared to around a 6% fall for an index of euro zone banks .SX7E.

"Despite the uncertainty, we find this excessive in light of (1) the limited EPS risk for banks at this stage, and (2) already depressed valuation levels at which French banks were trading, both in absolute terms and relative to the sector," Barclays equity analyst Sam Moran-Smyth says.

"On balance, we think SocGen and CredAg are more at risk than BNP, considering that BNP is less exposed to France and more diversified (both geographically and from a business mix point of view)," Moran-Smyth adds.

"We also highlight that SocGen's profitability is lower than CASA's, meaning any French related hit may hit SocGen's profitability disproportionately vs. peers."

(Samuel Indyk)

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TUESDAY'S OTHER LIVE MARKETS POSTS:

CAUTIOUS EQUITY REBOUND CONTINUES CLICK HERE

EUROPEAN STOCKS POISED TO REBOUND FURTHER CLICK HERE

ALL ABOUT RATES CLICK HERE



Euro zone, French stocks suffer from political uncertainty https://reut.rs/3Rwubzw

Europe bounces for second day https://reut.rs/3z7wQJC

French banks https://tmsnrt.rs/3KQ4mqc

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