As Hermes Sourcecap chief executive Andrew Parry puts it, banks are "funny creatures".
"[Banks] can be very opaque but when they restructure and focus on equities we see profits."
Hermes Sourcecap has recently added Unicredit to its holdings, deemed to look attractive after slashing costs and selling off assets, including putting its stake in the Ukraine up for offer.
"We used to shy away from banks, but now we are starting to see a change as they are willing to finally tell a balance sheet for what it is. They now have a clean sheet," co-manager of Hermes Sourcecap Europe ex-UK fund, Tim Crockford, said.
However, other investors are treading cautiously and trimming down exposure.
Adam Avigdori, co-manager of the BlackRock UK Income Fund, see challenges ahead in the banking sector.
"The banking sector continues to be challenged by returns, capital and regulation. We have recently been reducing exposure to the banking sector, preferring to invest in the UK insurance sector," he said.
Five major UK equity income funds currently hold of up to nearly 14% in major banks. Whether or not this exposure will change as 2014 progresses will likely be down to the individual fund manager.
Find out which big five funds stand out with their exposure to the banking sector.
