Finally, a payday for European bank investors

For more than a decade, one of the most reliable stories in global finance has been the lagging performance of European banks against their U.S. peers - in both earnings and investor returns. Lenders in Europe are still trading at 70% below their 2007 peak before the global financial crisis, a summit U.S. lenders reoccupied in 2018.

But things are looking up on the Old Continent. In the past three months, European banks have outperformed U.S. banks by 20% in dollar terms. There are two principal reasons why this may be more than a false dawn.