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President of the European Central Bank Christine Lagarde on Dec. 2, 2019. Photo: Thierry Monasse/Getty Images

In contrast to the blowout returns of their U.S. counterparts last year, European banks delivered uninspired returns to investors.

What happened: U.S. banks like Citigroup and JPMorgan drove a 32% return for the S&P financial sector, slightly edging the S&P 500's 31% rise. Europe’s bank stocks index ended 2019 up 8%, but trailed the broader European Stoxx 600, which rose 23%.

  • Investors had lofty expectations to begin the year, WSJ notes (subscription), as the European Central Bank was expected to raise interest rates. But those quickly fizzled, and the ECB not only cut interest rates but restarted its TLTRO and quantitative easing stimulus programs.
  • Some lenders have started charging to hold big cash deposits to reduce the sting of negative interest rates.

Why it happened: The ECB's shift didn't help, but banks' troubles weren't all a result of monetary policy, experts say.

  • "It's also lack luster prospects for economic growth," Tom Essaye, president of Sevens Report Research, tells Axios. "The EU economy isn’t doing as well as the U.S. economy and as such, loan growth potential isn’t as good."
  • "In general loan demand is weak in Europe as are the economies in general," Joseph Trevisani, senior analyst at FXStreet, adds in an email. "Cheap funds are not enough if no one wants the money."

By the numbers: The eurozone grew at 0.2% in both the second and third quarters of 2019, and EU policymakers expect the bloc grew by just over 1% last year.

The bottom line: "Europe’s banks worked through the dreariness of 2019, in some cases admirably," WSJ's Rochelle Toplensky writes. "That is about the best investors can hope for in 2020 as well."

Go deeper:

Go deeper

Updated 7 hours ago - Sports

The potential GOAT of chess faces intriguing challenger

Illustration: Sarah Grillo/Axios

The World Chess Championship between Norway's Magnus Carlsen and Russia's Ian Nepomniachtchi began on Friday, 1,094 days after Carlsen won his fourth consecutive title.

Why it matters: During the long, COVID-fueled layoff, chess entered a new era, and with the championship finally here, the age-old game is ready for its close-up.

Department of Interior proposes raising cost of drilling on public lands

A horizontal drilling rig and a pump jack sit on federal land in Lea County, New Mexico. Photo: Callaghan O'Hare/Bloomberg via Getty Images

Oil and gas companies should pay more to drill on federal lands and waters, the Department of the Interior argued in a report released Friday, saying that the current rates were "outdated."

Driving the news: The Department of Interior report said that the federal government's oil and gas leasing and permitting program "fails to provide a fair return to taxpayers, even before factoring in the resulting climate-related costs that must be borne by taxpayers."

8 hours ago - Health

U.S. to restrict air travel from 8 countries over new COVID variant concerns

A COVID-19 vaccine is administered. Photo by Joe Raedle/Getty Images

The U.S. will impose new air travel restrictions in response to the Omicron variant, a new COVID strain first detected in South Africa, President Biden announced Friday.

The big picture: Air travel from South Africa, Botswana, Zimbabwe, Namibia, Lesotho, Eswatini, Mozambique and Malawi will be restricted starting on Monday.