Banks

Will Kwasi Kwarteng’s U-turn bring some much needed stability to the UK economy? Dillon Lancaster shares his thoughts

With UK banks pulling mortgages from the market, Douglas Charleston explains why this doesn’t reflect any fundamental weakness in the UK banking sector, but rather the uncertainty created by the sharp moves in UK rates.

With bank Additional Tier 1 (AT1) bonds broadly trading at a 10% discount to par and many being priced to perpetuity, Dillon Lancaster suggests investors are either missing or ignoring the solid fundamentals on show in Q2 earnings.

Political chaos is once again taking the headlines in the UK, but bond investors should be cheering the UK regulator’s decision to raise banks’ capital buffers in preparation for an anticipated economic downturn, says Gary Kirk.

After 18 months of difficult headlines Credit Suisse could ill afford more negative press, and we therefore welcomed its decision to refinance its 7.125% Additional Tier 1 (AT1) bond last week at its first call date.

The past couple of weeks have seen a flurry of new issuance as rates and credit markets have stabilised, and the European summer lull is approaching fast.

Despite the ECB's recent review bringing some previously debated points surrounding AT1s to the forefront, we believe any changes would create undesired, real-world consequences if implemented.

The reshaping of Deutsche Bank since the end of the global financial crisis has been one of the longest-running transformation stories in the banking sector.

European bank equity has been among the hardest hit sectors since Russia’s invasion of Ukraine, as fears of losses and a flight to quality have prompted investors to change positioning.

As 2021 wore on we became increasingly concerned that the disconnect between asset prices, economic fundamentals and monetary policy was becoming more acute.

As bondholders, we are comforted by all the banks passing such a severe test.

We agree that banks are sitting with an abundance of excess capital and will use some of it to repay shareholder support. However, capital buffers will remain elevated for some time to come,