Credit Suisse and other European banks are trading at bargain-basement valuations, making them a solid buying opportunity. A recent tax-evasion investigation has damaged the Swiss bank’s reputation. But much of the negativity and related fines are priced into the stock price.

“Credit Suisse has one of the top private banking franchises in the world,” Morningstar analysts wrote in a note April 20. “Operating profitability is exceptional, with normalized margins around 40 percent.”

The second-largest Swiss bank after UBS, Credit Suisse oversees about CHF 1.3 trillion, or $1.36 trillion, in assets. Its financial services run the gamut from investment banking, including trading, securities underwriting, and brokerage services, to private banking, including asset management. Investment banking makes up 50% of revenue while private banking accounts for 30%.

Credit Suisse is restructuring operations in Switzerland by laying off workers and expanding into emerging markets. Tidjane Thiam, who will become CEO in June 2015, reportedly may cut nearly 3,000 people or 15 percent of staff from the investment bank to save money. Thiam may cut 150 billion Swiss francs of assets from the bank's fixed income, commodities and currencies business to focus more on asset management and private banking and less on investment banking. Asset management and private banking are two times more profitable that other financial services.

Thiam brings a superb track record for growth as the CEO of Prudential. Credit Suisse shares rallied 5% the day the company announced Thiam was taking over the helm. Investors are betting that he will improve margins and further expand into Asia.

Credit Suisse saved CHF 3.5 billion in costs by the end of 2014 and aims to save an additional CHF 1.0 billion by the end of 2015, including cost reductions in private banking and investment banking. The company forecasts a CHF 300 million cut on 2014 pre-tax income, about 3 percent, from the Swiss franc strengthening and negative interest rates. However, additional cost savings of CHF 200 million targeted by the end of 2017 should limit the adverse impact.

“Credit Suisse continues to build its capital base and reduce risk-weighted assets and leverage,” wrote S&P Capital IQ in a stock report April 18. “We welcome Credit Suisse's moves to increase the contribution of its private bank where returns are less volatile and less capital intensive.”

If Credit Suisse continues with strong performance in its investment banking division, carries on with cost-cutting efforts, and stays the course with assets under management growth in emerging markets, I believe it can begin trading in earnings multiples closer to its peer UBS, which trades at 12.6 times forward earnings.

UBS analysts forecast Credit Suisse’s assets under management will grow 7 percent this year. Rising assets under management in the face of strong equity markets and currency moves offsets earnings challenges from ultra-low interest rates and regulatory uncertainty, they say.