View more on these topics

Woodford says bank recovery will take three more years

Invesco Perpetual income guru Neil Woodford believes it will be at least another three years before the banking sector becomes an attractive investment prospect.

Speaking at the Fund Strategy Investment Summit in Austria recently, Woodford said the sector is still to fully recognise the extent of the damage from to their balance sheets, with more losses set to come.

He said banks will not only have to raise capital to offset those losses but will also have to be better capitalised in the future on the back of Basel III.
He said: “Instead of having capital to asset ratios of 2 per cent, there has been talk of capital to asset ratios of 20 per cent. There will also be more competition in the sector.”

Woodford, who once held as much as 30 per cent of his income portfolio in banks, said the sector is set for both domestic and international headwinds.
He said: “I see banks becoming a lower-return, capital-intensive industry and it is already priced for that in my view. To get to that, there will need to be more capital injections.”

Hargreaves Lansdown head of research Mark Dampier says: “Woodford is probably right. The truth is there are more att-ractive sectors in the market.”



Former IFA Defence Union chief Owen setting up as claim chaser

Former IFA Defence Union chairman Evan Owen is moving into claim management. The Ministry of Justice, which regulates the claim management sector, authorised Owen last week. He says he was prompted to enter the sector after getting requests for help from IFAs on claims they wanted to bring on behalf of new clients. He says: […]

Third of MPC now backing bank rate rise

Three members of the Bank of England’s monetary policy committee voted to increase interest rates in February, raising the likelihood of a rise this month. Minutes from February’s MPC meeting reveal that Spencer Dale joined Andrew Sentance and Martin Weale in calling for a rise in bank rate. Sentance, who has been calling for a […]

Resolution has open and shut case for exit

Resolution could split its operations between an open front book and a closed back book as it considers an exit strategy for its UK life sector consolidation project. Chief executive John Tiner says the idea is one of a number of options being put to shareholders as the firm prepares an exit plan for when […]


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 thought leadership.

    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