The Big Question: Is now the time to get back into financials?

David Meade, Ignis Weak fundamentals     Not in our view and we remain cautious on the European banking sector. Fundamentals are still weak with few signs of real recovery at a time when bank creditworthiness is inextricably linked to the credit quality of eurozone sovereigns themselves. We believe the sovereign situation will worsen in Europe in 2012, impacting bank credit quality further. The sector is still too fragile and spreads do not adequately price in the downside risks. In both cash and CDS, senior bank debt has contracted sharply since November 2011, but this is more...