View more on these topics

‘Steer clear of bailout bank stocks’

Investors should avoid government-influenced bank stocks due to a lack of dividends and an expected exodus of talent, says New Star global financials fund manager Guy de Blonay.

Speaking last week at a New Star manager question time, De Blonay warned that government-controlled financial institutions that have little prospect of near-term dividend payments are “difficult investments”.

He said: “They have to cancel their dividend for the next year or so and repay expensive preference share rates so it is very difficult to see any real interest as they have no income attached.”

He believes that global governments will take a more prominent position in the banking system in the second half of 2009 as they endeavour to stabilise their economies. He warned this could be to the detriment of shareholders as a shake-up in the bonus and salary structure of many firms could lead to an exodus of talent.

De Blonay noted that RBS’s efforts to repay government preference capital quickly in order to resume dividend payments in 2010 may bolster its position but he added that Barclays’ expensive dec- ision to raise capital independently may be the price to pay to retain talent.

He said: “Global financials that can avoid government intervention will be the survivors. They will be the major winners over the next year or two, will be the most profitable and are those to invest in.”

Informed Choice director Martin Bamford says: “I would not suggest steering clear of these stocks completely as, in a wider portfolio, they can still play a role but always as a long-term play rather than an immediate prospect of return.

“It is important to remember that all global financial stocks are suffering and they have got to get finance from somewhere so even if they do not get it from the government, it is still going to come with terms and conditions or at a cost.”


CC to ban point of sale PPI

The Competition Commission has proposed a ban on point of sale payment protection insurance as part of its attempt to increase competition in the PPI market.

Rates of exchange

Accused of being behind the curve in countering the downside risk caused by the turmoil in the financial markets, the monetary policy committee took the bold decision to cut beyond expectations last week and invite speculation as to the true extent of the problems in the UK economy.


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm