Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/banco-santander-sa" target="_blank" data-smartkarma-citation="entities:21296:1">Banco Santander Sa (SAN SM)</a> shares have underpeformed <a href="https://www.smartkarma.com/entities/banco-santander-mexico-b" target="_blank" data-smartkarma-citation="entities:27672:1">Banco Santander Mexico-B (BSMXB MM)</a> since the offer announcement in April, making the offer less appealing to SanMex minorities</li>
<li>In addition, SanMex delivered good results in 1Q19, and there is still some potential for results to improve at the margin</li>
<li>Santander parent management argues that SanMex minorities can benefit from risk diversification, especially in the current volatile political climate in Mexico and the uncertain outlook in the Mexico-US  trade wars</li>
<li>Yet SAN's poor share performance reflects the challenges that its core European operations face, and the soft share price may require SAN management to sweeten its all-share offer; the offer is expected to be launched in September or October 2019</li>
</ul>



Banco Santander Sa (SAN SM) shares have underpeformed Banco Santander Mexico-B (BSMXB MM) since the offer announcement in April, making the offer less appealing to SanMex minorities
In addition, SanMex delivered good results in 1Q19, and there is still some potential for results to improve at the margin
Santander parent management argues that SanMex minorities can benefit from risk diversification, especially in the current volatile political climate in Mexico and the uncertain outlook in the Mexico-US  trade wars
Yet SAN's poor share performance reflects the challenges that its core European operations face, and the soft share price may require SAN management to sweeten its all-share offer; the offer is expected to be launched in September or October 2019


Santander Parent for SanMex Offer Update; Wooing the Minorities?

Global Bank Equity Specialist, Creative Portfolios

Paul Hollingworth

Global Bank Equity Specialist

Creative Portfolios

Thematic (Sector/Industry)

We take a look at a sample of European banks at Q119, and score them by financial strength (FUN), by trends and value-quality (PH Score) and by valuation (VAL).We do not include a number of French and UK lenders on account of incomplete quarterly data but include some restated Italian financials. Where we have sufficient data, we carry out this ranking process and try to give a broad feel for opportunity and risk in the region. There are many others that we could have included.We also wanted to see how Greek banks stand up relative to European peers. See <a href="https://www.smartkarma.com/insights/piraeus-bank-risky-but-too-cheap" target="_blank" data-smartkarma-citation="insights:30201">Piraeus Bank: Risky but Too Cheap</a>, <a href="https://www.smartkarma.com/insights/eurobank-battle-hardened-and-transformation-bound" target="_blank" data-smartkarma-citation="insights:28612">Eurobank: Battle-Hardened and Transformation Bound</a>. The same can be said of EM favourite, <a href="https://www.smartkarma.com/entities/sberbank-of-russia-pjsc" target="_blank" data-smartkarma-citation="entities:24142:1">Sberbank Of Russia Pjsc (SBER LI)</a> , which is currently in the bottom decile of our VFM rankings. See <a href="https://www.smartkarma.com/insights/sberbank-the-beast-from-the-east" target="_blank" data-smartkarma-citation="insights:18727">Sberbank: The Beast from the East</a> when the lender was arguably a more attractive proposition.For further detail and granularity on a number of the banks evaluated here, we would steer folks towards <a href="https://www.smartkarma.com/insights/italian-banks-m-a-the-complex-italian-job" target="_blank" data-smartkarma-citation="insights:30383">Italian Banks M&amp;A - The Complex Italian Job</a> by <a href="https://www.smartkarma.com/profiles/victor-galliano" target="_blank" data-smartkarma-citation="accounts:3251">Victor Galliano</a> and <a href="https://www.smartkarma.com/insights/hsbc-a-thin-veil" target="_blank" data-smartkarma-citation="insights:29648">HSBC – A Thin Veil</a> by <a href="https://www.smartkarma.com/profiles/daniel-tabbush" target="_blank" data-smartkarma-citation="accounts:12">Daniel Tabbush</a>. CP has written previously about the upside and downside of <a href="https://www.smartkarma.com/entities/banco-bilbao-vizcaya-argentari" target="_blank" data-smartkarma-citation="entities:21251:1">Banco Bilbao Vizcaya Argentari (BBVA SM)</a> and we feel that <a href="https://www.smartkarma.com/profiles/victor-galliano" target="_blank" data-smartkarma-citation="accounts:3251">Victor Galliano</a> provides the necessary expertise on this lender today as well as equally LATAM-heavy <a href="https://www.smartkarma.com/entities/banco-santander-sa" target="_blank" data-smartkarma-citation="entities:21296:1">Banco Santander Sa (SAN SM)</a>. Some of the LATAM entities appear to be reporting pretty benign trends. Our colleague, <a href="https://www.smartkarma.com/profiles/ercan-uysal" target="_blank" data-smartkarma-citation="accounts:2911">Ercan Uysal</a>, has some interesting insights into Turkish exposure at HSBC, BBVA, and others.We only include one Scandinavian lender. We have been cautious on this market for a while now. See <a href="https://www.smartkarma.com/insights/nordic-banks-underperformance-or-something-more-serious" target="_blank" data-smartkarma-citation="insights:19950">Nordic Banks: Underperformance or Something More Serious?</a>  Our individual VFM rankings are not included here. But they show that a number of European banks feature in the top decile globally such as Spanish lenders, Erste Bank (not included here), and CS. From a valuation and technical (oversold) viewpoint, low growth Europe cannot be dismissed out of hand if the price is deeply below intrinsic value.Corporate activity continues to be a hot topic in Europe as well as negative rates and general Japanification scenarios. It would be instructive to hear Japanese guru, <a href="https://www.smartkarma.com/profiles/j-brian-waterhouse" target="_blank" data-smartkarma-citation="accounts:1459">J. Brian Waterhouse</a>'s views on this. Corporate activity is a response to a generally low NIM, subpar profitability, quite high LDRs and CIRs, elevated NPLs, and a stagnant monetary policy situation all within a framework of stricter capital rules and tighter regulations. However, the merging of weak entities, such as the once proposed DB-Commerzbank tie-up, would not add value. <a href="https://www.smartkarma.com/entities/deutsche-bank-ag-registered" target="_blank" data-smartkarma-citation="entities:526:1">Deutsche Bank Ag Registered (DBK GR)</a> remains the canary in the coal mine or the elephant in the room. Its fate will impact and influence the European Banking System to a large degree. The German lender certainly casts a shadow over the region's sector. Even now it has assets of $1.54 trillion, almost half Germany’s $3.4 trillion GDP. Not "too big to fail" but "far too big to fail". I wonder when someone out there in the analyst community will actually say that its too cheap to ignore...such a career bet may just be too risky.

We take a look at a sample of European banks at Q119, and score them by financial strength (FUN), by trends and value-quality (PH Score) and by valuation (VAL).We do not include a number of French and UK lenders on account of incomplete quarterly data but include some restated Italian financials. Where we have sufficient data, we carry out this ranking process and try to give a broad feel for opportunity and risk in the region. There are many others that we could have included.We also wanted to see how Greek banks stand up relative to European peers. See Piraeus Bank: Risky but Too Cheap, Eurobank: Battle-Hardened and Transformation Bound. The same can be said of EM favourite, Sberbank Of Russia Pjsc (SBER LI) , which is currently in the bottom decile of our VFM rankings. See Sberbank: The Beast from the East when the lender was arguably a more attractive proposition.For further detail and granularity on a number of the banks evaluated here, we would steer folks towards Italian Banks M&amp;A - The Complex Italian Job by Victor Galliano and HSBC – A Thin Veil by Daniel Tabbush. CP has written previously about the upside and downside of Banco Bilbao Vizcaya Argentari (BBVA SM) and we feel that Victor Galliano provides the necessary expertise on this lender today as well as equally LATAM-heavy Banco Santander Sa (SAN SM). Some of the LATAM entities appear to be reporting pretty benign trends. Our colleague, Ercan Uysal, has some interesting insights into Turkish exposure at HSBC, BBVA, and others.We only include one Scandinavian lender. We have been cautious on this market for a while now. See Nordic Banks: Underperformance or Something More Serious?  Our individual VFM rankings are not included here. But they show that a number of European banks feature in the top decile globally such as Spanish lenders, Erste Bank (not included here), and CS. From a valuation and technical (oversold) viewpoint, low growth Europe cannot be dismissed out of hand if the price is deeply below intrinsic value.Corporate activity continues to be a hot topic in Europe as well as negative rates and general Japanification scenarios. It would be instructive to hear Japanese guru, J. Brian Waterhouse's views on this. Corporate activity is a response to a generally low NIM, subpar profitability, quite high LDRs and CIRs, elevated NPLs, and a stagnant monetary policy situation all within a framework of stricter capital rules and tighter regulations. However, the merging of weak entities, such as the once proposed DB-Commerzbank tie-up, would not add value. Deutsche Bank Ag Registered (DBK GR) remains the canary in the coal mine or the elephant in the room. Its fate will impact and influence the European Banking System to a large degree. The German lender certainly casts a shadow over the region's sector. Even now it has assets of $1.54 trillion, almost half Germany’s $3.4 trillion GDP. Not "too big to fail" but "far too big to fail". I wonder when someone out there in the analyst community will actually say that its too cheap to ignore...such a career bet may just be too risky. 

European Banks at Q119: Big Banks, Greek Banks...a Quantamental Evaluation

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Our outlook on global equities (both the MSCI ACWI and ACWI ex-US) remains positive and we continue to expect higher equity prices going forward.  In additional to highlighting important technical levels across major markets, we reiterate our recommendation to add exposure to global financials, and highlight a number of attractive Financial stocks, with an emphasis on UK and European names.

Our outlook on global equities (both the MSCI ACWI and ACWI ex-US) remains positive and we continue to expect higher equity prices going forward.  In additional to highlighting important technical levels across major markets, we reiterate our recommendation to add exposure to global financials, and highlight a number of attractive Financial stocks, with an emphasis on UK and European names. 

Global Equity Strategy: EU and UK Financial Stocks Are Attractive

Accelerating Tomorrow’s Independent Research

Boost Research

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Cross Asset Strategy

<ul>
<li>
<a href="https://www.smartkarma.com/entities/21296" target="_blank" data-smartkarma-citation="entities:21296:1">Banco Santander Sa (SAN SM)</a> has announced that it will make an all share, voluntary offer for <a href="https://www.smartkarma.com/entities/27672" target="_blank" data-smartkarma-citation="entities:27672:1">Banco Santander Mexico-B (BSMXB MM)</a> minorities</li>
<li>The offer values the c 25% free float in SanMex at €2.56bn, which implies, at current exchange rates, a premium of 14%</li>
<li>Santander management's rationale for the offer "reflects its confidence in Mexico and its Mexican subsidiary as well as their long term growth potential" and it increases"its capacity to generate capital organically"; this latter point is helpful, given Santander parent's tight core capital ratio</li>
<li>It is also opportunistic by Santander management, in our view; the maximum up-take of the offer implies 3.5% dilution at the parent, and SanMex is cheap on PBV compared to its quoted LatAm sister banks and versus its own history</li>
<li> We see the offer as, at best, fair, but certainly not generous. Still, this offer is positive for investor sentiment towards the Mexican banks and Santander Mexico share price in the very near term; it is also a small positive for Santander parent, in our view</li>
</ul>



Banco Santander Sa (SAN SM) has announced that it will make an all share, voluntary offer for Banco Santander Mexico-B (BSMXB MM) minorities
The offer values the c 25% free float in SanMex at €2.56bn, which implies, at current exchange rates, a premium of 14%
Santander management's rationale for the offer "reflects its confidence in Mexico and its Mexican subsidiary as well as their long term growth potential" and it increases"its capacity to generate capital organically"; this latter point is helpful, given Santander parent's tight core capital ratio
It is also opportunistic by Santander management, in our view; the maximum up-take of the offer implies 3.5% dilution at the parent, and SanMex is cheap on PBV compared to its quoted LatAm sister banks and versus its own history
 We see the offer as, at best, fair, but certainly not generous. Still, this offer is positive for investor sentiment towards the Mexican banks and Santander Mexico share price in the very near term; it is also a small positive for Santander parent, in our view


Santander's All-Share Offer for SanMex; Scooping up Minorities for a Modest Premium

The MSCI ACWI ex-U.S. is breaking topside its nearly 14-month downtrend and above key resistance. The move is being fueled by improvements throughout most of Europe and the UK, along with strength in China over the past 2-3 months. We believe these positive developments are supportive of higher equity prices moving forward. We provide a technical appraisal of all major markets.The STOXX 600 Banks and Insurance Sectors are exhibiting bullish price inflections and RS indicates these areas may be emerging as leadership. In today’s report we highlight actionable stocks throughout the int’l Financial Sector.

The MSCI ACWI ex-U.S. is breaking topside its nearly 14-month downtrend and above key resistance. The move is being fueled by improvements throughout most of Europe and the UK, along with strength in China over the past 2-3 months. We believe these positive developments are supportive of higher equity prices moving forward. We provide a technical appraisal of all major markets.The STOXX 600 Banks and Insurance Sectors are exhibiting bullish price inflections and RS indicates these areas may be emerging as leadership. In today’s report we highlight actionable stocks throughout the int’l Financial Sector.

MSCI ACWI Ex-U.S. Breaking Topside Its Downtrend: Europe & The UK Look Attractive

Spain

Banco Santander SA attracts deposits and offers retail, commercial and private banking, and asset management services. The Bank offers consumer credit, mortgage loans, lease financing, factoring, mutual funds, pension funds, insurance, commercial credit, investment banking services, structured finance, and advice on mergers and acquisitions.

Price Gauge
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Banco Santander Sa (SAN SM)

Santander Parent for SanMex Offer Update; Wooing the Minorities?

Banco Santander Sa (SAN SM) shares have underpeformed Banco Santander Mexico-B (BSMXB MM) since the offer announcement in April, making the offer...

Victor Galliano

European Banks at Q119: Big Banks, Greek Banks...a Quantamental Evaluation

We take a look at a sample of European banks at Q119, and score them by financial strength (FUN), by trends and value-quality (PH Score) and by...

Paul Hollingworth

Global Equity Strategy: EU and UK Financial Stocks Are Attractive

Our outlook on global equities (both the MSCI ACWI and ACWI ex-US) remains positive and we continue to expect higher equity prices going forward. ...

Vermilion Research

MSCI ACWI Ex-U.S. Breaking Topside Its Downtrend: Europe & The UK Look Attractive

The MSCI ACWI ex-U.S. is breaking topside its nearly 14-month downtrend and above key resistance. The move is being fueled by improvements...

Vermilion Research

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Santander Parent for SanMex Offer Update; Wooing the Minorities?

Banco Santander Sa (SAN SM) shares have underpeformed Banco Santander Mexico-B (BSMXB MM) since the offer announcement in April, making the offer...

Victor Galliano

European Banks at Q119: Big Banks, Greek Banks...a Quantamental Evaluation

We take a look at a sample of European banks at Q119, and score them by financial strength (FUN), by trends and value-quality (PH Score) and by...

Paul Hollingworth

Global Equity Strategy: EU and UK Financial Stocks Are Attractive

Our outlook on global equities (both the MSCI ACWI and ACWI ex-US) remains positive and we continue to expect higher equity prices going forward. ...

Vermilion Research

Santander's All-Share Offer for SanMex; Scooping up Minorities for a Modest Premium

Banco Santander Sa (SAN SM) has announced that it will make an all share, voluntary offer for Banco Santander Mexico-B (BSMXB MM) minorities The...

Boost Research

MSCI ACWI Ex-U.S. Breaking Topside Its Downtrend: Europe & The UK Look Attractive

The MSCI ACWI ex-U.S. is breaking topside its nearly 14-month downtrend and above key resistance. The move is being fueled by improvements...

Vermilion Research