Bank dividend warning leaves fund managers unfazed

A report out today from Morgan Stanley forecasting harsh dividend cuts by European banks has left equity income managers largely unfazed as many have already reduced exposure to the sector.

Morgan Stanley predicts European bank dividends will be "very constrained" as the Basel Committee pushes for stringent minimum capital requirements and Barack Obama increases pressure on the sector. Tightening controls on the world's banks is expected to figure large in discussions at the World Economic Forum, which begins in Davos today. Meanwhile, the International Monetary Fund recently warned banks will have to raise "substantial additional capital" to avoid another crisis. Morgan Stanley's European bank analyst Huw van Steenis says dividend expectations on nine banks have been...