Nordic banks, long considered among the safest in the world, are losing their appeal as an investment target as lenders further south start to look more attractive, according to PineBridge Investments, a multi-asset manager that oversees about $85 billion.
Graeme Bencke, the portfolio manager who heads equity strategy at PineBridge in London, says the circumstances that made banks in Sweden, Denmark, Norway and Finland a “good investment in the post-crisis period” no longer exist.
“Now, we’re in more of an upswing and a lot of the European banks that had been in trouble, southern European in particular, are now starting to see an incremental improvement,” Bencke said in an interview in Stockholm. “So there’s a much bigger inflection point in valuation in those banks than there is in the Nordics. That’s kind of keeping us away from the Nordic banks.”
Investors have so far stayed loyal to banks in the Nordic region, where prosperous and stable economies have been relatively unscathed by the wave of financial shocks to have hit since 2008.
Sweden’s four biggest banks are all in the top half of Bloomberg’s index of European financial stocks, based on price-earnings ratios for next year. Nordea Bank AB, the biggest Nordic lender, has seen its share price soar about 50 percent over the past 12 months.
Meanwhile, banks further south are starting to emerge from years of trouble. In Spain, Banco Santander SA’s recent takeover of Banco Popular Espanol SA shows southern Europe’s banks are successfully dealing with their weakest links.
Source: Bloomberg Pro Terminal
Junior Trader Stefan Panteleev
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