Shame on any bank that has not seized on the rally in financial stocks to set in motion plans to raise fresh equity capital. The investor mood is as good as it is likely to get. Promising first-quarter results from Credit Suisse, Deutsche Bank and, on Wednesday, BNP Paribas, have ignited the touch paper under European bank stocks. The FTSE Eurofirst 300 banks index has doubled from its February low. Price-to-tangible book values have leapt to a heady 1.2 times from 0.6 times in February.

BNP Paribas shares rose 7 per cent after France’s largest bank reported better-than-expected net income of €1.6bn – though it was 21 per cent lower than the same period last year – as its investment bank swung from a €2.1bn fourth-quarter loss to a pre-tax profit of €1.2bn. That recovery, plus lower risk-weighted assets, allowed a 100 basis point rise in its tier one capital ratio to 8.8 per cent. Baudouin Prot, chief executive, dismissed any thought of raising fresh capital. Yet, with an uncertain economic and regulatory outlook, BNP – and other European banks, notably Deutsche – would be unwise not to raise fresh equity capital while they can, not least to absorb future writedowns.