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LONDON (Alliance News) - Polar Capital Global Financials Trust PLC Tuesday said there are good prospects for emerging competitors to the traditional bank lenders in countries such as the UK.
"The dislocation across traditional banking sectors in countries such as the UK has also thrown up opportunities for new entrant challenger or specialist lender banks. Without legacy issues and taking up the space vacated by traditional lenders, the prospects for these emerging players are very encouraging. Our managers have been proactive in identifying these opportunities," Chairman Robert Kyprianou said in a statement.
A number of so-called challenger banks have listed in London over the past year, with new entrants to the sector being encouraged by the relaxing of regulatory requirements by authorities in the UK.
Nick Brind and John Yakas, the investment trust's investment managers, said: "In the last six months two more so-called 'UK challenger' banks, Aldermore and Shawbrook, have floated. Along with One Savings Bank, all three in which the Trust has holdings, have performed well, reflecting their high profitability and strong loan growth relative to peers while larger UK banks remain distracted by legacy issues. All three focus primarily on small business and property lending such as buy-to-let."
"Arguably the bigger challenge to the sector will be the impact from technology with new entrants clearly trying to disrupt both the origination and distribution of financial services. It remains to be seen how successful they will be as some of the high valuations attached to recent IPOs have appeared excessive," Brind and Yates said.
The comments came as the trust said it generated an undiluted net asset value total return of 8.3% in the six months to the end of May, as the MSCI World Financial Index (total return with dividends reinvested), which is its benchmark, rose by 4.9%.
Chairman Kyprianou said the trust has been encouraged by improved sentiment towards global financial companies, particularly those in the banking sector.
Managed by Polar Capital LLP, which is part of London-listed Polar Capital Holdings PLC, the trust primarily invests in companies operating in banking, insurance, and property.
Shares in the trust were down 0.2% at 109.80 pence on Tuesday after midday in London. The stock is up about 12% so far in 2015.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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