Shares of big banking institutions can increase under a best-case scenario, value investor Rich Pzena said Tuesday.

The founder of Pzena Investment Management informed CNBC's 'Halftime Report' that the most compelling risk-reward originated from such names as Goldman Sachs, JPMorgan, Bank of America as well as Citigroup.

'Banks have rebuilt their resources, and they've started to make good returns,' he said. 'We're sitting in an environment where the benefit far goes over the disadvantage, so it's a fantastic place for a worth investor to be.'

Pzena, who oversees $26.4 billion in assets, handles the John Hancock Classic Value fund, which saw a 40.5 % return in 2013.

Three points need to happen for banking stocks to reach their potential, Pzena said, consisting of a recovery in trading quantity, putting their litigation expenses behind them and also a normalization of rates of interest.

If those 3 things occur, Citigroup could possibly see its $4^1/2 earnings per share climb toward $8 each share, he added.

'If those things don't occur, you sit around and also you collect your 7 or 8 % return on that book, which you're buying at a discount,' he said. 'And also if the good ideas take place as well as rates return to typical and volumes return to normal and also expenditures come down, you have actually obtained a large benefit. So, it's a really nice risk-reward compromise.'