Bullish on European Banks

Featuring Keith Mullin

While the prospect of state bailouts remains on the table, Keith Mullin, founder of KM Capital Markets and former editor of the International Financing Review, is upbeat on the value in European Banks, as we enter an acceleration of the rate cycle and higher net interest margins. Filmed on May 23, 2017, in London.

Published on
31 May, 2017
Topic
Credit Market, Financial System, Europe
Duration
3 minutes
Asset class
Bonds/Rates/Credit, Equities
Rating
79

Comments

  • NS

    Niek S.

    6 6 2017 08:59

    6       0

    I did research into CoCos for my University thesis and am surprised that CoCos are presented as a trade idea for private investors on RV. It are really complex and difficult instruments that can be disastrous when financial conditions change. With their negative gamma and their embedded option / writing down characeristic they are in my opinion not suited for private investors.

    • DR

      David R.

      7 6 2017 19:54

      0       0

      Yep, thank you for your feedback and recommendation.

  • MS

    Matt S.

    5 6 2017 09:14

    0       0

    High-Trigger CoCos.............. and what, prey tell, is a HT CoCo?

  • JO

    John O.

    1 6 2017 02:32

    11       0

    This is the first RV I have not voted up or down because I do not understand the products he is recommending. I've been investing for over 40 years and I'm reaching the "Get off my lawn!"
    stage with these new financial instruments. Perhaps one of you youngsters could explain this.

    • DS

      David S.

      3 6 2017 18:59

      0       0

      I voted up, even though I do not understand most of the instruments. I am sure however, this is interesting for those that do understand. For a two minute format in TRADE IDEAS, the guest must assume that he is speaking to a narrow audience. I will look into senior preferred bank debt for general interest. Thank you for your comment. DLS

    • AS

      Amit S.

      4 6 2017 13:03

      1       0

      This is why a retail investor should 'typically avoid' investing in CoCos http://www.euromoney.com/Article/3587535/Deutsche-totters-on-the-brink-once-again.html

      for questions such as What, Why and How read this report by BIS
      http://www.bis.org/publ/qtrpdf/r_qt1309f.pdf

    • NB

      Nikola B.

      18 6 2017 20:57

      0       0

      Owning a coco is like having a short put on bank's equity - you get all the equity downside, but your upside is capped. It's the kind of instrument you own for relatively good carry, but you are exposed to negative convexity if the instrument is unlikely to be called on the next call date. If the CET1 trigger is hit or bank regulator proclaims that the coco issuer (bank) is non-viable and needs to be resolved, you get written off if the coco is a write-off instrument rather than equity conversion instrument (in which case you get equity which is worth zero anyway). I agree with the comments above that this is too complex of an instrument for less experienced private investors.