Nomura has upgraded banking giants HSBC and Barclays to buy, but downgraded Lloyds to neutral, after assessing the Independent Commission on Banking (ICB) report and Eurozone risks."The publication of the final ICB report reduces some of the uncertainty facing UK banks, although at the expense of likely earnings dilution.""Analytically, we find it difficult to see this level of valuation as anything other than attractive and the shares as oversold. We therefore advocate a positive stance, particularly within a European bank sector context. UK banks are significantly less exposed to the current Eurozone risks and have recapitalised."While the macro environment in the UK is negative and uncertain, the broker says that bank profitability will continue to recover and book value and capital will continue to grow.Nomura said that for years, HSBC has become a defensive banking sector investment, "outperforming market sell-offs, but underperforming rallies". Due to its capital position, funding and geographic mix, the broker believes the bank will keep its defensive attractions."In our view, relative performance will depend on risk appetite and in particular sentiment towards official action on the Eurozone and banking sector issues. However, we now regard the shares as attractive in absolute terms." A 725 price target is maintained.Meanwhile, the broker says that the main uncertainty surrounding Barclays it the profitability of the capital markets operations, rather than the risks to credit quality from slowing economic growth."Barclays is [...] the UK group which is most exposed if the European crisis were to spiral out of control. However, even making what we regard as relatively conservative assumptions, we believe losses would be unlikely to exceed 40p per share [...] Despite the strategic problems the group faces and the likely absence of genuinely positive catalysts, we regard the shares as undervalued at 40% of tangible book value (TBV)." The broker's target price stays at 268p, based on 80% of TBV.However, Nomura has cut Lloyds' rating from buy to neutral on the back of greater uncertainties, saying that the stock represents "a judgement between the value of its core operations and the potential cost of exiting non-core."As Lloyds is principally a traditional domestic UK banking group, the broker notes that a mixture of an economic slowdown, funding market weakness and restructuring "makes short-term earnings projections highly uncertain", causing downgrades to forecasts. The target price is cut from 50p to 40p.BC