UPDATE 1-Nomura cuts Greek banks, raises European banking sector

* Upgrades Bank of Ireland, Danske Bank to buy

* Cuts Alpha Bank to reduce, EFG Eurobank to neutral

* Prefers Italy over Spain; Ireland over Greece

April 19 (BestGrowthStock) – Nomura downgraded Greek banks, citing
continued worries over liquidity and a deteriorating economic

However, the brokerage upgraded the European banking sector
to “bullish” from “neutral,” on improving economic and
sector-earnings outlook for 2010, low interest rates and
inexpensive valuation.

Nomura said Greek banks would remain profitable and
reasonably well capitalised, but it does not expect them to be
in a position to repay the government-subscribed preference
shares or paying dividends.

“While we do not anticipate Greece defaulting on its
sovereign debt, its ability to finance itself in the private
markets continues to remain unclear,” the brokerage said.

On European banks, the brokerage said it recommended buying
large caps such as Credit Suisse (CSGN.VX: ), BNP Paribas
(BNPP.PA: ) and UniCredit (CRDI.MI: ).

The U.S. Securities and Exchange Commission’s charges
against Goldman Sachs (GS.N: ) indicate a more proactive
regulatory environment, which impacts investment banks more
than commercial banks, Nomura said.

However, the details of the case and the bank’s robust
defence suggest the market’s reaction was out of proportion
with the likely cost and breadth of the problem, the brokerage
said, adding that it sees the broad-based sector sell-off as an
opportunity to move overweight on the banking sector.

The brokerage prefers Italy to Spain and Ireland to Greece
as it expects investors will continue to distinguish sovereign
risks between economies.

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(Reporting by Jennifer Robin Raj in Bangalore; Editing by Vinu

UPDATE 1-Nomura cuts Greek banks, raises European banking sector