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European banks a ‘unique buying opportunity’: CEO

Katy Barnato
Updated
European banks a ‘unique buying opportunity’: CEO

Following the furor around bad loans, the head of one of Italy's biggest banks said now could be the time to buy Italian real estate and Europe's bank stocks.

Shares in Italian banks have tumbled this year since the European Central Bank requested further information on their still-large portfolios of non-performing loans. However, the chief executive of Intesa Sanpaolo told CNBC that fears were overstated and the slump represented a "unique buying opportunity."

"There is too much confusion, too much panic within in the market. I think the situation is probably absolutely better than two months ago, because the real estate market is recovering. So I think this is a unique buying opportunity, if you look at the Italian banking sector, but also, the European banking sector," Carlo Messina told CNBC in London on Monday.

Shares of Intesa Sanpaolo, which is one of the euro zone's largest banks by market capitalization, have fallen by more than 23 percent since the start of the year.

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On Monday, Messina said that the bank's stock of bad loans had declined and suggested investors focused on net rather than gross bad loans.

"If you have, like Intesa SanPaolo (Milan Stock Exchange: ISP-IT), 40 billion euros ($44 billion) of gross bad loans, but you have 15 billion euros net — because we posted 25 billion euros of provisions — and you have 30 billion euros of collateral facing the 15 billion euros you are in a situation of having a proxy of zero risk. And then you have all the benefit of the recovery in the real estate market in Italy," he told CNBC.

Shares of Intesa SanPaolo fell by around 1 percent on the day on Monday when several banks cut Intesa Sanpaolo's target share price, including Nomura, Barclays and JP Morgan.

This came after Intesa Sanpaolo reported fourth-quarter net income on Friday of 13 million euros, versus 722 million euros in the third quarter and 48 million euros in the fourth quarter of 2014.

Messina added that the bank would benefit in the economic recovery in Italy.

Italy's economy grew by 0.8 percent last year after shrinking slightly in 2014, the first year of Prime Minister Matteo Renzi's leadership. Growth is seen accelerating to 2016 by the European Commission.

Concerns around European bank stocks continued to hit shares on Monday, with trade in Barclays' stock (London Stock Exchange: BARC-GB) temporarily halted because of high volatility.

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