Category Archives for "Bank Capital"

13th February 2019

To Fall or Not to Fall on the Non Call | Bank Capital Insights

Head Scratcher or Mis-priced Hope? Banco Santander (SANTAN) in the end decided not to call their EUR 6.25 Perp 19 AT1 for economic reasons.  This is the first AT1 not to be called and, to some extent, this has come as a surprise to most investors.  However, purely from an issuer perspective, it makes complete […]
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11th February 2019

Relative Value in EUR High yield AT1s | Trade Ideas

Periphery or Core Eurozone AT1..tough to choose..

UCGIM or RBIAV AT1

In general, investors seem to like owning AT1s issued by core Eurozone banks and avoid those issued by peripheral banks, especially the Italians. They are probably right to do so to a large extent given the potential tail risks emerging from Italian politics, for example. But, what if there is a core Eurozone bank that is mostly EM in nature but benefits from its Austrian domicile?

That brings us to our trade idea for this week – Long the UCGIM 6.75 Perp 21 at 98 cash price and short the RBIAV 4.5 Perp 25 at 82 cash price…

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6th February 2019

Ring (ING) in the profits | Bank Capital Insights

Beauty in its simplicity… ING reported Q4 and fully year 2018 earnings on Wednesday morning and investors seem to like the simplicity of the underlying business model and overall ease in understanding the drivers of its earnings.  Net income for 2018 came in at EUR 4.7 billion (despite the EUR 775 million of regulatory settlement […]
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4th February 2019

Perceptions can sometimes be wrong | Bank Capital Insights

Italian banks may be the focus but the French banks may need a re-assessment Without a doubt an Italian recession or political crisis will have significant impact on the Italian banks given the amount of government debt they hold and the ongoing reliance on ECB for funding.  And these issues are well documented and no […]
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1st February 2019

Darkening Business (DB) Prospects..what to do now?| Trade Ideas

Light at the end of  the tunnel or..

Deutsche Bank (DB) reported Q4 (and full year) 18 results on Friday morning and they were hardly inspiring. The bank continues to underperform its rivals driven by what we believe to be is a broken business model, excessive reliance on FICC and very high cost base. The Q4 performance demonstrated the scale of the problems given the very difficult market conditions and drop in trading volumes.

And for all its efforts in 2018, the bank generated net income of just EUR 267 million translating to a meagre RoTE of 0.5%.  On the positive side though, the bank generated annual profits for the first time since 2014.  With a cost-to-income ratio of almost 93%, it seems that the bank needs to do radical restructuring and substantially move away from the FICC business and focus entirely on corporate banking and wealth management.  In the meantime, what should AT1 investors do?

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30th January 2019

SANTAN – Spain may be its home BUT… | Bank Capital Insights

LATAM is where it is growing… SANTAN delivered in line earnings this morning driven by growth in its LATAM franchises and consumer finance businesses in Europe. For the year 2018, net income increased by 18% to EUR 7.8 billion, translating to a ROE of 8%.   SANTAN is now becoming more and more reliant on […]
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29th January 2019

Show Time! | Bank Capital Insights

European bank earnings are upon us… The large US banks reported much better than expected Q4 earnings and revenue growth (other than in FICC) and we saw a significant rally in their respective stock prices.  Now, a number of the large cap European banks are due to report earnings this week including Santander, DB, BBVA […]
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25th January 2019

BCP AT1 high coupon and high risk | Bank Capital Insights

BCP re-opens the EUR AT1 market – valuation thoughts Who would have imagined that the first AT1 deal of 2019 would come from a Portuguese Bank and that on the day of the ECB meeting?  BCP, Portugal’s largest private sector bank issued its debut EUR AT1 paying a coupon of 9.25% for a Perp NC5 structure […]
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23rd January 2019

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