FirstFT: How one man led Capital’s €8bn sale of European banking shares

A single Capital Group portfolio manager led an €8bn selloff of European banking stocks this year after war in Ukraine and the threat of a global recession dragged the sector investing giant down .

Capital, one of the world’s largest fund managers with $2.7 billion in assets, was until recently one of the few active investors backing European bank stocks, which had become pariahs after a decade of depressed profitability, misconduct scandals and market share losses during their restructuring. after the financial crisis.

Over the past few years, under the leadership of respected portfolio manager Nick Grace, Capital had built up large, often top-five, stakes in lenders such as Barclays, Deutsche Bank, Commerzbank, Societe Generale, UniCredit, Santander, BNP Paribas and UBS.

But fears of higher inflation and lower growth sparked by the Russian invasion of Ukraine prompted Grace and some of his fellow Capital managers to sell 8.1 billion euros of shares of these banks this year, according to people familiar with the matter and Financial Times calculations.

Grace – a London-based New Zealander who co-manages Capital’s $160 billion EuroPacific growth fund – accepted losses to shield Capital Group from what he believed to be greater damage.

Thank you for reading FirstFT Europe/Africa. Here’s the rest of today’s news

The news of the war in Ukraine

• Obligations : Russia’s invasion of Ukraine has jittered bond markets in the Baltics and Finland and discouraged international investment as fund managers seek to avoid geopolitical risks.

• Germany: Three days after Russia invaded Ukraine, the German government announced that it would spend 100 billion euros to modernize its army. Some officers ask: what took so long?

• Energy: Vagit Alekperov, former boss of Lukoil, Russia’s second largest oil group, warned the EU that the country’s crude was “impossible to replace”. Gazprom Energy is considering a rebrand in the UK.

• Food safety: The finance minister of Egypt, the world’s biggest wheat importer, said “millions” could die as the war cuts off vital grain supplies.

Five other stories in the news

1. EU states brace for additional liquidity demands from Brussels EU member states are preparing to receive requests for more money from Brussels as the bloc’s budget is strained by war in Ukraine, the refugee crisis and rising inflation. The European Commission has used most of its budgetary room for maneuver after a series of unexpected requests.

2. HSBC suspends banker over comments on climate change HSBC has suspended Stuart Kirk, global head of responsible investing in the bank’s asset management division, pending an internal investigation into a presentation he made at the FT Moral Money Summit on last week in which he said the financial risks of climate change were overstated.

3. The era of globalization is coming to an end, warn business leaders in Davos The era of three decades of globalization is in danger of being reversed, according to leaders and investors gathered at the World Economic Forum. Offshoring, renationalization and regionalization are the latest trends for companies, said José Manuel Barroso, chairman of Goldman Sachs International.

4. ABB and Siemens support Norwegian battery startup ABB and Siemens are leading a €100 million fundraising round by Morrow Batteries, a start-up that aims to start production in its home country of Norway by the end of next year. Boosting investment in battery production has become an urgent strategic objective for Europe to tackle the energy crisis.

5. Anthony Albanese sworn in as Australian Prime Minister Anthony Albanese has been sworn in as Australia’s 31st Prime Minister as his Labor Party moves closer to forming a government after a disputed election over the economy and national security in which voters rejected climate policies and of Scott Morrison’s government.

The day ahead

EU meetings The General Affairs Council of the EU and the Eurogroup of 19 finance ministers from the single currency region meet today in Brussels. European Central Bank releases Eurozone investment fund statistics, while Germany releases monthly IfA Business Confidence Index

Biden in Asia US President Joe Biden will present his Indo-Pacific economic framework in Tokyo, which has been watered down to entice more countries to join the deal.

business profits Zoom Video Communications releases first quarter results and Kingfisher gives business update.

What else we read

Italy’s economic outlook worsens in the face of inflation Italy started 2022 on the verge of sustained growth and structural reforms supported by the leadership of Prime Minister Mario Draghi and the injection of funds from the EU. But the economic outlook has become so bleak that the country faces the possibility of a recession.

A ‘bonfire of decency’: Peter Hennessy on Boris Johnson Peter Hennessy has stalked Westminster like no one else since the 1970s. He has written definitive books on UK prime ministers, the constitution, the civil service and intelligence agencies. Now, like almost everyone, he wonders where it all went wrong and how it could be.

Long live the difference between work and play France’s attempt in 2017 to grant employees a “right to disconnect” from work had limited impact. But Italy and Spain are taking similar measures, and Portugal is banning companies from contacting employees outside working hours. Meanwhile, the EU is drafting a directive to tackle work-related digital overload.

• Learn more about the job: Employers believe that perceived productivity is just as important, if not more so, than actual productivity. But leadership consultant Nels Abbey urges an end to the curse of presenteeism.

FT Executive Education Ranking 2022: demand rebounds HEC Paris in France has for the first time topped the FT’s annual dual executive education rankings for open-enrollment programs and customized courses for corporate clients, with major academic institutions reporting an increase in demand for non-degree courses. Read full rankings and profiles of top schools.

Late reality check for the Fed The U.S. central bank and financial markets are experiencing a long-awaited reality check on inflation and interest rates, writes Sonal Desai, chief investment officer at Franklin Templeton Fixed Income. The markets are just beginning to take into account how much the world has changed.

Technology

Not a day goes by without reports of an AI-powered achievement, investment or national plan, writes Esteve Almirall, data professor at Esade Business & Law School in Barcelona. Yet AI adoption is largely absent from most organizations we interact or work with directly.