Deep Dive: Financial sector set to benefit from a non-zero interest rate environment

End of the European banks’ ‘ice age’

Eve Maddock-Jones
clock • 4 min read

The end of quantitative easing and the return of interest rates has been a catalyst for investing in financials, with traditional banks benefiting “almost immediately”.

Speaking to Investment Week, Sebastiano Pirro, chief investment officer, Algebris Investments, said banks had been "under construction" for the past 15 years following the Global Financial Crisis, and the focus on rebuilding balance sheets and reducing risks had been "generally good for credit investors, but not so much of the equity investor". He said: "If that was not bad enough for the beleaguered shareholder, central banks cut interest rates to negative levels or zero, which eviscerated banks' revenue from half of their balance sheet, i.e., their deposits." Deep Dive: Bond manager...

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