Research Team at Deutsche Bank, suggests that whilst the profitability outlook for European financials remains highly uncertain, a personal view is that the credit risk has been exaggerated in recent days. Key Quotes “The ECB still has numerous facilities that banks can use to prevent liquidity concerns. Having said this even if the market is wrong on this, a mistaken selloff can lead to self-fulfilling problems in a sector like financials. If stress continues then as a minimum bank lending that has recently helped European growth could easily suffer which in turn would weaken the operating environment for banks - and all because of a sell-off that was sentiment driven. Banks are often a confidence play and there isn't much of it around at the moment. One wonders what the ECB could possibly do at their March 10th meeting to enhance such an elusive commodity. At some point soon the market will start discussing this as surely it's not in the ECB's interest to see such destabilising focus on what are transmitters of their policy through the economy.” For more information, read our latest forex news.