Broker snap: North European banks get nod over the south

Nomura highlights the attractive valuations of EU banks, but says the sector is volatile and its preference if for northern European commercial banks over those in the south.Analyst Jon Peace says the sector valuation is low after recent macro-related underperformance, and ongoing uncertainty surrounding the euro and resulting increase in volatility "should prove to be a good buying opportunity".According to Peace, southern European banks are under a greater earnings risk than the northern sector due mostly to the impact of austerity on growth and credit quality, and the cost and availability of funding.But he thinks the risk to northern banks, largely through government bonds and second-order exposures like interbank loans, is "over-discounted".The Japanese broker says Lloyds offers good upside potential but cannot justify the valuation for RBS, and prefers HSBC over Standard Chartered.