Global week ahead: ‘Cockroaches’ crawling toward Europe?

European banks are in the spotlight this week as earnings season kicks off, but with heavy losses across the sector on Friday, credit concerns look set to cross the Atlantic at a particularly challenging time for lenders in the region.

Last week, the biggest names in American finance competed to make the week’s most alarming proposal. Contestants: JPMorgan CEO Jamie Dimon, Citi Group CEO Jane Fraser and Apollo boss Marc Rowan.

Dimon started the week with a stark warning about the private loan market, saying “when you see one cockroach, there’s probably more.”

Fraser was next, warning of “valuation froth”. More specifically, Rowan suggested in a recent statement that there was “a willingness to go easy.” Appeared in Financial Times.

What does the sound of sirens in the US mean for Europe, and how will bankers across continents communicate their concerns as earnings season gets underway in earnest next week?

Earnings season begins in Europe

single credit, Barclays, Lloyds Banking Group And Northwest Will lead financial names reporting in Europe and the UK

Federated Hermes Head of Credit Finance Filippo Alloatti told CNBC that he expects CEOs to “shift from macro risk to micro risk” as a focus on earnings calls this week due to concerns in private credit markets. Morningstar’s Johann Scholtz, meanwhile, told CNBC that while he didn’t see a significant deterioration in credit quality in third-quarter results, “it will be interesting how candid management teams will be when discussing the future evolution of credit quality.”

“The market is underestimating the impact of (trade) tariffs on certain pockets of European banks’ loan books,” Scholtz said, highlighting concerns about corporate and small-to-medium company loan books.

Bank stocks sold off sharply across Europe on Friday as credit concerns led to big declines. German Bank, Société Générale, UBS and their peers in the industry.

margin of error

CNBC’s Silvia Amaro sits down with Unicredit CEO Andrea Orcel as the bank announces its latest earnings. S&P Global expects the third quarter to be sluggish due to narrowing net interest margins and high funding costs.

The Italian lender is pursuing its merger and acquisition targets by increasing its stake in Greece’s Alpha Bank to 26%. “We are grateful to the Greek government, the central bank and other Greek institutions for welcoming us and encouraging our investment,” Orcel said. Reaction to Unicredit’s expansion plans in Germany remains lukewarm.

car problem

British lender Lloyds Bank is also due to report next week, as it said its balance sheet had taken a fresh hit of £1.95bn following a regulatory ruling into the mis-selling of car finance loans. The Financial Conduct Authority estimates the scandal will cost UK lenders up to £11bn. IG expects that charge will offset a strong quarter for the bank as net interest income continues to rise, unlike some of its European rivals.