European Banks’ Beauty Only Skin-Deep, Investors Say

European Banks’ Beauty Only Skin-Deep, Investors Say
A man walks past Deutsche Bank offices in London, Britain, December 5, 2013. Reuters/Luke MacGregor/File Photo
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LONDON—Europe’s top banks may have survived a milestone test of their resilience but strengthened balance sheets count for little when they generate such meager returns compared with U.S. rivals, investors say.

The European Banking Authority stress test results on Nov. 2 showed the sector in reasonable financial health, with a clean sweep of 48 lenders judged capable of withstanding economic shocks like a crash in real estate or bond prices.