Europe's Bank Storms Headed to U.S.
NEW YORK (TheStreet) -- U.S. big bank investors may want to use unusually negative comments by European bank conglomerate CEO's in recent earnings as a reason to reassess the risks to financial institutions on this side of the Atlantic - even as first quarter earnings at JPMorgan(JPM) , Bank of America(BAC) , Citigroup(C) , Goldman Sachs(GS) and especially Morgan Stanley(MS) reflected a revival in some key businesses.
On Thursday, Deutsche Bank(DB) , Europe's largest bank by assets, and Barclays(BCS) , Britain's second biggest lender reported improving profits that were below year-ago-levels, mirroring the first quarter results of most U.S. investment banks. But the commentary of both banks' CEOs on those earnings warrants a focus by investors in U.S. banks - especially those who aren't ready to call a 2012 sector rally a recovery.
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"Financial markets remain cautious -- as we have seen in April, with investor risk appetite markedly lower," said Deutsche Bank chief executive Josef Ackermann in a letter to shareholders. "Investors, particularly private investors, remained wary after the market turmoil of last year."
Barclays chief executive Robert Diamond mirrored concerns of an April slowdown, in commentary that seemed to refute some of the optimism that spread over the financial sector to start the year. "It was not a robust first quarter," said Diamond in a media call with reporters, according to Bloomberg. "It was only robust compared with the third or fourth. I think most people would say April was a bit sluggish compared to the first three months."