Ten years ago, the economic crisis was gathering pace and shares in the financial sector were in freefall. Since then, the fortunes of individual UK banks have been very mixed. These once-popular shares became pariahs that had no choice but to restructure and recapitalise. Plus they had to deal with various scandals and the challenge of low interest rates – and they still do.
So it’s no surprise that financial stocks – especially banks – have been marked down by the market over the past decade. Until now, only hardened value investors have shown much interest, but that has started to change. A trend we’re seeing right now in a number of shares across the financial sector is that they fit the investment profile of Turnarounds. It suggests that after a long period in the wilderness, some of these beaten up stocks are picking up momentum.
Banking on a recovery
One of the lessons of the credit crisis was just how difficult it is to understand banks and the assets they’re exposed to. Take Royal Bank of Scotland, which was a poster child for the crisis. Back in February 2007 it reported a record operating profit…
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