RBS continues to be a contentious area, with Rob James, financials analyst at Old Mutual Global Investors, saying they were staying well away due to the “unquantifiable uncertainty” over it with its poor legacy and uncertain future. “Bitter experience tells us that fines from the US on European banks are tough,” James said.
Preston, on the other hand, is standing by RBS and said: “Everybody hates RBS and I think that’s irrational, yes there are some legacy issues but I think long-term the bank will come through.”
Overall, James credits a combination of yield curves and interest rates going “in the right direction” for his positive outlook for bank shares, which he says are increasing enough, but not too much to add risk.
He added he is intent to remain overweight in One Savings Bank, a Challenger bank catering mostly for professional buy to let lenders, attractive in the simplicity of its business.
“The first half of 2016 was a horrid time. Central banks were moving their interest rates to negative and the outlook for growth was bad. It’s far better now,” James concluded.
