As banks look to take their next round of liquidity from the European Central Bank lending facility at the end of next month, Citywire AAA rated fund manager Thorsten Winkelmann says he still won’t buy financials.
The Frankfurt based manager who oversees the Allianz RCM Europe Equity Growth fund and the Allianz RCM Continental Europe funds, says the €500 billion lending programme from the ECB to banks last December made it even harder to separate good banking stocks from the bad.
‘What the ECB lending facility has done is treat all banks the same. Now all banks can lend at the same cost regardless of whether they are good or not,’ said Winkelmann whose growth fund has 4% in financials.
European banking stocks this week dropped lower as negotiations between private holders of Greek debt and officials remain in deadlock.
Some equity managers have seen the bank lending programme as an opportunity to buy banks after the sector has seen drops in trading prices. Yesterday, Threadneedle's European ex-UK equity manager Paul Doyle told Citywire Global he had bought European banks last December after signals the ECB would implement liquidity measures.
‘I can’t see myself buying banking stocks for a long while,' said Winkelmann. 'Only then when it is clear what the capital regulation is and what it will mean for the different banks.’
Winkelmann, who oversees just over €1 billion, says he watches Standard Chartered as it fulfils his investment criteria but isn't held in the fund yet. 'That a bank has a clear business structure,’ he said.
‘I can’t see through the business structure of most banks. I don’t know yet what it will mean for a bank if it is forced to separate its investment and retail arms.’
‘If you go to some of the CEOs of Germany’s biggest banks, they don’t know either. It’s just a too uncertain environment for banking now – and it will be for months.’
The Europe Equity Growth fund has returned 84.5% compared with the average fund manager in the equity Europe sector who returned 25.7% over the last three years. Over the last year, the Continental European fund returned -5.8% compared with the average manager who returned -13.6%.