Bloomberg News

Trust in Banks’ Book Value Is Broken, Hintz Says: Tom Keene

October 04, 2011

Oct. 4 (Bloomberg) -- Bank stocks may drop further on concern a sovereign debt default in Europe would hamper lenders’ ability to liquidate assets, said Brad Hintz, an analyst at Sanford C. Bernstein & Co.

“The belief in book value has been broken,” Hintz said today in a radio interview on “Bloomberg Surveillance” with Tom Keene. “Is there a floor in these stocks? I wish I could tell you there was.”

JPMorgan Chase & Co., Citigroup Inc. and Morgan Stanley are trading at more than a third below book value amid Europe’s sovereign debt woes and slowing global growth. Firms may have a difficult time valuing their holdings in the event of a default by Greece, creating uncertainty among investors as market liquidity seizes up, said Hintz, who is based in New York.

Financial shares in Europe are under pressure as regulators struggle to quell concern that their lenders may be hurt by the debt crisis. Banks with global franchises that “generate great returns in normal market conditions” and that are implicitly backed by the government may still tumble because “fear is driving everything,” Hintz said.

The 81-company Standard & Poor’s 500 Financials Index has plummeted 31 percent since the start of the year. The Bloomberg Europe Banks and Financial Services Index of 46 firms has dropped 36 percent.

--Editor: Steve Dickson

To contact the reporter on this story: Charles Mead in New York at cmead11@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net


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