What these risks show is that e urozone banks need to implement a much more aggressive recapitalization plan . Capital increases and eliminating cash dividends will likely have to return. Managers do not want to do it because shares are too low according to them. However, waiting for a bounce has proven to be a big mistake. 2018 was the year of the perfect combination to drive banks shares higher: Confidence in the eurozone, the likelihood of rate hikes, improvement of fundamentals and earnings growth. None of it happened. Waiting for things to get better for asset classes is not enough.
Eurozone banks are better than three years ago. They are nowhere close to having solved their challenges.