OPM puts stake in reverse convertibles covering UK banks

OPM Fund Management has invested in a reverse convertible product covering three UK banks in the view their share prices are unlikely to significantly fall over the next year.

Last week, OPM allocated 2.7% of its £36m Fixed Interest product, and 4.2% of its £7.5m High Income fund, to a reverse convertible structured product, with exposure to RBS, Barclays and Lloyds Banking Group. Société Générale is the counterparty on the product, which pays a coupon of 5.3% quarterly. In contrast, Barclays shares yield approximately 1%, while Lloyds and RBS have suspended dividends. Tony Yousefian, OPM’s chief investment officer, says: “Banks are on the road to recovery, but with the regulation and restrictions likely to be imposed on them, they are unlikely to pay di...