Financial Institutions – Banks: Third 2013
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Financial Institutions – Banks: Third 2013

Returning to third place after a year at No. 2 is the Bank of America Merrill Lynch team helmed by Derek De Vries,

Derek De Vries & team

Bank of America Merrill Lynch

Returning to third place after a year at No. 2 is the Bank of America Merrill Lynch team helmed by Derek De Vries, who “does a good job framing complicated subjects in simple language,” declares one U.K.-based fund manager. “He is an outstanding bank strategist and good at explaining ongoing changes to regulation and the interplay between banks and political change in the euro zone.” With seven researchers working out of London, Madrid and Paris, the crew covers 41 stocks, the same number as last year. Among the analysts’ current recommendations is France’s Société Générale. “It is among the cheapest banks in Europe,” De Vries says. “We think its valuation is inconsistent with its through-cycle profitability,” especially in light of the firm’s recent efforts to shed underperforming assets. “We expect SocGen’s disposal program to unlock value and believe that as its capital position improves organically, investors will start to pay more attention.” The team is generally upbeat about the sector’s prospects this year and anticipates rising liquidity, receding tail risks and a gradual pickup in growth. “In that environment we could see European bank book values growing by roughly 5 percent and shares rerating by a further 15 percent — leading to a roughly 20 percent return for shareholders,” De Vries notes.

Leslie Kramer


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