There are opportunities in the banking sector despite a rise in volatility and concern over steep losses at some lenders, according to fund manager Cole Smead. The portfolio manager at Smead Capital said Monday that he was buying shares of regional lender Western Alliance Bank even as the KBW Regional Banking Index lost more than 7% last week. The stock makes up 1.36% of the Smead Value Fund . The sell-off in banking stocks was sparked by investor concerns that New York Community Bancorp ‘s surprise loss on commercial real estate (CRE) loans signaled broader problems for the sector. Investors are worried that other lenders may be forced to crystallize CRE losses amid high interest rates and lingering post-pandemic office vacancies. In Europe, Switzerland’s second-largest bank, Julius Baer , recently disclosed a $700 million loss from commercial real estate lending. “It’s the banks that made bad decisions that are making [other] banks look attractive in pricing,” Smead told CNBC’s Squawk Box Europe. “You can go and buy bank stocks for below book value. And these banks are producing return on capital that’s greater than 10%.” Book value is calculated by subtracting a company’s liabilities from its assets. “As an equity investor that enjoys finding those opportunities, I mean, this is hog heaven,” he added. Smead also said that Western Alliance’s comparatively high return on equity (RoE), a measure of how efficiently a company generates profits, and strong track record make it an attractive investment. Western Alliance Bank’s 16.1% RoE is significantly higher than its peers’ average at 13.4%, according to FactSet data. Smead believes that banks producing double-digit RoE over a five-to-10-year period should trade above book value. However, Smead cautioned that the sector is “not out of the woods” entirely and expects periods of volatility to return over the next two to three years. “This stock could double” There are parallels between European and U.S. banks, according to Smead, with attractive valuation opportunities on both sides of the Atlantic. The fund manager is bullish on European banking giant UniCredit despite economic headwinds in Europe. He believes UniCredit’s share buybacks while the shares trade below book value will drive book value growth higher than the current 8% return on equity. “When you buy back shares below book, there is a multiplier effect on book value growth,” Smead explained. UniCredit reported a 16.6% return on equity in its 2023 full-year results Monday, exceeding Smead’s expectations. “At this level of return on equity, this stock could double from its current multiple,” Smead later told CNBC Pro. The stock is the second-largest holding in the Smead International Value Fund at 8.22%. Additionally, due to UniCredit’s decision to write down the value of its Russian assets to zero, Smead believes the bank is “structurally over earning” compared to its stated assets. The fund manager expects UniCredit will trade above book value over the next 12-18 months and use its stock to pursue further acquisitions.