Sell Deutsche Bank and Buy Natixis, Credit Suisse Says

Deutsche Bank (DB) is set to remain the worst performer in the European financial sector, according to analysts at Credit Suisse. But French bank Natixis  (NTXFF) claimed the top spot as Europe's most likely outperformer in the analysts' monthly investment tip sheet.

Both stocks are down for the year to date after a plethora of concerns over global political, economic and financial stability drove investors out of the banking sector throughout the first half.

But they have both also benefited from the recent election of Donald Trump, although Deutsche Bank more so, given that the President-elect is seen as likely to be a lighter touch when it comes to most forms of regulation.

However, the banks' fortunes could be about to diverge, with Natixis likely to benefit more from a Trump presidency over the medium term.

Deutsche Bank, regardless of Trump's tone on the subject of regulation, undoubtedly faces a substantial fine from the Department of Justice over the sale of mortgage-backed securities during the financial crisis.

And capital concerns and threadbare returns to investors are likely to remain a weight around the ankles of the German lender, according to Credit Suisse.

Jan Wolter, an analyst with the Swiss bank, predicted Deutsche could look to raise €6 billion to €8 billion ($6.3 billion and $8.5 billion) quickly to raise its common equity Tier One capital ratio to about 13%, assuming a DoJ fine of about $5 billion.

Wolter has forecast that a €7 billion capital raising would reduce tangible book value per share for Deutsche to €30.

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Intermediate Trade: Germany ETF