European Banks Set to Trail Wall Street as Provisions Swell
- Region’s lenders have been slower to prepare for bad loans
- A shift toward equities trading also portends underperformance
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European banks probably failed to live up to U.S. peers’ record fourth-quarter profits as they set aside more money for troubled loans and missed out on the rally in equities trading.
Ten of Europe’s biggest lenders probably set aside $15 billion for doubtful credit in the fourth quarter, taking the year’s total to $61.5 billion, the highest since 2012, according to analyst estimates compiled by Bloomberg. Many of the top U.S. banks, by contrast, bolstered profit by releasing reserves made earlier in the year.