It’s been a rough year for Financials on both sides of the Atlantic, but for financials in Europe, it has been especially painful. What makes the recent declines in European financials so bad is that not only are they doing worse than their US peers, but they never rallied as much in the first place on the way up. The chart below shows the performance of the S&P 500 Financials and STOXX 600 Financials (in USD terms) over the last five years. From early February 2011 through its peak last July, the S&P 500 Financials sector was up 52%. During the same span, US investors invested in the STOXX 600 Financial sector were down nearly 3% in dollar terms. Since that peak, US Financials have declined 20.4% while their European peers are down 26%. Altogether over the last five years, the S&P 500 Financial sector is up 21% compared to a dollar adjusted decline of 28% for European Financials. Ouch.