Copying and distributing are prohibited without permission of the publisher.


Optimism and gloom

By Jasper Cox
16 Nov 2020

Last week's update from Pfizer and BioNTech about their vaccine candidate appears to have galvanised bank investors. The Euro Stoxx Banks index was up 17% on Friday afternoon, compared with where it started the week.

It is a ray of optimism amid fears about the effect of a second lockdown and continued low interest rates on banks' balance sheets. Interestingly, Commerzbank was one of the big performers in the rally. It is yet to reveal its new strategy, although as GlobalCapital reported last week, it is feeling more optimistic about its trade finance business.

Economies are not out of the woods yet, though, as we argued on Thursday: the pandemic’s scars will be felt acutely next year.

Still, in capital markets, banks continue to report positive results. At Crédit Agricole, which released results last week, the corporate and investment bank generated 10% more in underlying revenue in the third quarter compared with last year.

This was led by what the firm categorises as capital markets and investment banking, where revenues jumped by a quarter to €678m. This is its second best quarter for underlying revenue since the start of 2017 — after the second quarter of this year — and was up 23% on analysts’ mean estimate.

Crédit Agricole is also launching a private investment banking division, as like rivals it seeks to tap into demand from ultra-high net worth clients. The unit is in conjunction with Indosuez Wealth Management, a subsidiary of the CIB.

Silvia Calvello takes charge as global head of private investment banking; she was previously the coverage global head of the consumer goods, retail and business services sector.

While many were feeling more positive on bank stocks last week, Finnish financial services firm Sampo reduced its stake in Nordea, following pressure from activist investor Elliott International.

Elliott has said that Sampo's stake in bank had caused a “substantial de-rating” of Sampo’s insurance assets.

Also countering the feel-good mood in the sector was Société Générale, which said that planned "adjustments and optimisations" should lead to a net reduction of around 640 posts in France. It is reducing the risk profile of its credit and equity structured products business and mulling changes to securities services too, along with some central functions. The bank said that the cull should be able to occur without forced redundancies.

Meanwhile, in personnel moves, trading and brokerage firm BTIG has hired Hugo Clark as head of European trading and distribution at its UK-based entity BTIG Limited. Clark previously ran European cash trading at UBS.

The company says that in the last 18 months it has doubled the workforce across its offices in London, Edinburgh, Stockholm and Oslo. Samantha Huggins, previously head of equity sales trading for Europe, the Middle East and Africa at Citi, was another of the recent new joiners.

Finally, professional services firm Alvarez & Marsal has hired Floris Hovingh from Deloitte to help grow its debt advisory business in European private credit.

By Jasper Cox
16 Nov 2020