Buy regional banks, sell major banks

Christopher Joye

Coolabah Capital

Complex new banking rules released on Thursday night will provide a powerful tailwind for the major banks' rivals after 2016 by cutting capital needs, increasing returns and significantly enhancing their capacity to compete with the oligopolists. The latter's returns of over 15 per cent will go the way of the dinosaurs unless they can re-invent themselves a la Macquarie. Whereas this is a real fillip for smaller bank stocks, I don't think the majors have a role to play in an equities portfolio given the striking downside risks, chief of which is a share price re-rating back towards 1 times book value. CBA trading at 2.45 times book while Bank of Queensland prices at 1.4 times certainly makes no sense given my base case that their respective returns on equity will swing 180 degrees...Read my AFR analysis for free here (VIEW LINK)


3 topics

Christopher Joye
Portfolio Manager & Chief Investment Officer
Coolabah Capital

Chris co-founded Coolabah in 2011, which today runs $7 billion with a team of 33 executives focussed on generating credit alpha from mispricings across fixed-income markets. In 2019, Chris was selected as one of FE fundinfo’s Top 10 “Alpha...

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.