Societe Generale downgrades quartet of banks ahead of Basel 4 release

Societe Generale analyst Andrew Lim downgraded four big bank stocks – Citi (C), Goldman Sachs (GS), Deutsche Bank (DB) and JPMorgan (JPM) – all to Hold from Buy ahead of the publication of the rules for Basel 4, or B4, that are due in the coming weeks. Most European banks have guided to limited impact from B4, but Deutsche “stands out as an outlier,” the analyst tells investors. Meanwhile, for U.S. banks, B4 regulations “could drive much higher minimum capital requirements,” the firm argues. The firm downgraded the first three of the big banks stocks mentioned citing both a likely impairment of their ability to return capital compared to peers, together with other stock-specific reasons, while it noted that its downgrade of JPMorgan was being made “mainly on valuation grounds.” Societe Generale has a $160 price target on shares of JPMorgan, a $50 target for Citi, a $350 target on Goldman and an EUR 9.50 target on shares of Deutsche Bank.