Adderson snaps up distressed European banks in sell-off

Recent market sell-offs have prompted Henderson’s Emily Adderson to buy distressed European banking stocks after sharp share price falls.

French bank stocks have plummeted on fears over the country’s debt rating and its exposure to European sovereign debt, with last week’s GDP figures piling on the pressure.

Crédit Agricole fell 31%, BNP Paribas 27% and Société Générale 37% from highs over the last month.

Adderson, manager of the £76m Henderson Global Financials fund, had exposure to SocGen and Italian bank Intesa Sanpaolo, and has since bought more shares in both.

She upped exposure to both the French and Italian banks by about 1%, bringing both weightings to 2% of her fund.

“Some of these European names are trading on very distressed valuations. But taking a political view on what the near-term resolution to market fears will be is difficult to call. Instead we are looking at these stocks from a fundamental valuation perspective.

These are very attractive levels to be buying,” she said. Adderson said the impact on France of S&P’s US downgrade has been a key driver of market volatility in recent weeks.

“The market became very concerned over Italy a couple of months ago, but that has now spread to France, which is the new area of focus.”

Adderson has also seen opportunities in the UK’s banking sector where she has around 14% of the fund, and she has doubled positions in Barclays and RBS over the past few days.

“These prices are 30% down over the past month. There has been distressed selling in these names, so I have taken opportunities there.”

The Independent Commission on Banking’s report, to be released in September, will detail ring-fencing proposals potentially detrimental to banks. But Adderson expects the report to be a positive for the UK banking sector.

“There is a hope that politicians and regulators responses will be less penal than originally feared,” she said.

“With the pressure in the market and the fears around European banking systems, it would be prudent a less aggressive regulatory environment be implemented. This could be a positive catalyst.”

The manager is also keeping a few UK asset managers on watch she sees as attractively valued, including Mann Group and broker ICAP.

“UK asset managers are traditionally higher beta and have suffered as much as anything else. Some of them look very attractive, with stable inflows coming in for most of this year.”