Banco Santander, S.A. (ADR) (SAN), National Bank of Greece (ADR) (NBG): Gavyn Davies Might Be Wrong About Europe

This is because not all of Europe’s biggest banks are broke. Banco Santander, S.A. (ADR) (NYSE:SAN) and the Italian Unicredit still have strong asset bases and have de-levered quickly since 2009. Banco Santander, S.A. (ADR) (NYSE:SAN), which has a 10.3% core Tier 1 core capital ratio, has brought down its Spanish Net Real Estate portfolio from 41 billion at the end of 2008 to 12.5 billion at the end of 2012.

There are basically two options: Either I am right and the ECB is ready to support all big, relatively healthy European banks such as Banco Santander, S.A. (ADR) (NYSE:SAN), or it’s the end of the Euro, and the ECB has unchained the mother of all financial crises. It’s clear to me that the market is seeing the same picture I am seeing. The ETF that represents European main banking institutions, the Ishares MSCI Europe Fincls Sctr Indx Fd (NASDAQ:EUFN), is down by 2.2% year-to-date (YTD). The index, which is very well constructed with 102 different holdings, has as its top two assets the U.K.’s HSBC (13.2%) and Banco Santander, S.A. (ADR) (NYSE:SAN) (5.1%). If Mr. Market expects a catastrophe, the index will be way under water. This time, counting myself as one of Banco Santander, S.A. (ADR) (NYSE:SAN)’s (small) shareholders, I want Mr. Market to be right!

The article Gavyn Davies Might Be Wrong About Europe originally appeared on Fool.com and is written by Federico Zaldua.

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