Jane, a multi-asset fund manager, thanked a recovering economy, fewer regulatory pressures and the chance of an interest rise as key reasons behind the recovery in European Banks.
While he said he liked “all” banks on the continent, he said the French Societe Generale and Spanish BBVA are among the most attractive.
Jane said the risks posed by European politics is “very much overplayed”.
“It’s a market that has been squished”, he said. “But conditions are starting to improve”.
“It’s massively undervalued and unpopular with investors. They have been struggling for several years. There are issues but the issues appear to be passing.”
Around 4% of equity exposure is towards European banks, “quite a lot” in Jane’s words, and the total equity exposure of the fund is 58%.
Although Jane said he is still not “brave enough” to buy into the scandal-hit Deutsche Bank.
While European financials look healthy to Jane, he has moved out of long-dated bonds into short-dated over the “material risk” that central banks begin to slowly reduce the programme of QE.
He said: “It’s a vast amount of capital and liquidity that will get sucked out, that most certainly, within the fixed income markets, that could be a huge overhang.
“It could happen so slowly that we don’t notice, a bit like heating the water up with frog inside.”
He added his that it would “naïve” to think authorities and governments could keep things afloat when “they have not shown any skill in the past”.
