Bank stocks are largely continuing to perform in line with the overall stock markets but there is pessimism about their general economic prospects around the world.
In a new report, Commerzbank says the banking sector remains vulnerable to an economic slowdown but no more than the market as a whole. As long as the slowdown does not turn into a recession, it is advising investors that the banks should continue to track overall stock market trends.
Most of the European banks have been issuing reports to signal their likely performance this year but Commerzbank says they tend to have a very limited record of owning up to poor performance before their results.
However, it suggests that the second quarter of 2001 is shaping up to be a little weaker than the first three months but no major changes in revenues or costs are likely to need flagging ahead of the normal reporting season, according to Commerzbank's broking arm.
Among the banks it favours are BNP Paribas, AIB, Northern Rock and Anglo Irish Bank. Those that are vulnerable and should be sold include HSBC, UBS and Barclays.
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