Pietari Laurila
United Arab Emirates
2m
ᴡᴇᴇᴋʟʏ ᴜᴘᴅᴀᴛᴇ 20 ᴏᴄᴛᴏʙᴇʀ 2025 Bank shares slipped last week after concerns arose about credit losses at two US lenders. Zions Bancorp revealed borrower misrepresentations leading to a $50mn writedown, while Western Alliance disclosed a fraud lawsuit involving a commercial real estate client. Both stocks sold off sharply, dragging the sector and broader markets lower. These losses appear isolated rather than systemic. Each case involves alleged fraud, a classic sign of late-cycle excess. As credit spreads have tightened and competition intensified, lenders have occasionally sacrificed underwriting discipline in pursuit of yield. So far, there is little sign of the problem spreading to the wider banking system. Markets have already recovered last week’s losses, and the broader credit environment remains stable. For European banks, the risk from these credit losses looks limited. Balance sheets are among the strongest on record, profitability now exceeds pre-2008 levels, loan growth has been restrained, and exposure to non-bank financials is modest. Overall, this episode looks far less serious than the 2023 collapse of Silicon Valley Bank, when a major institution failed. What would concern me is an material increase in uncertainty that cannot be modelled. That is not the case today, so I remain comfortable holding significant banking exposure. One holding that has, however, seen uncertainty increase is BNP Paribas, which lost a US legal case over the weekend that analysts estimate could cost the bank in the low billions. The share price reaction — a 7 per cent drop, or about €6 billion in market value — implies that legal losses would need to mount for the damage to deepen. Still, banks are inherently risky investments. That’s why I keep any single-stock position below 10 per cent of the portfolio, ensuring no individual name can threaten the whole. 𝟮𝟬𝟮𝟱 𝗽𝗲𝗿𝗳𝗼𝗿𝗺𝗮𝗻𝗰𝗲 YTD +29.4% 𝗣𝗼𝗿𝘁𝗳𝗼𝗹𝗶𝗼 𝗰𝗵𝗮𝗻𝗴𝗲𝘀 BBVA, Aalberts, Nexi and Land Securities were sold. They were replaced by Banca Monte Dei Paschi Di Siena, UNITE Group, Gecina and Danske Bank. 𝗖𝗼𝗻𝘁𝗮𝗰𝘁 www.triangulacapital.com 𝘛𝘩𝘪𝘴 𝘤𝘰𝘯𝘵𝘦𝘯𝘵 𝘪𝘴 𝘧𝘰𝘳 𝘪𝘯𝘧𝘰𝘳𝘮𝘢𝘵𝘪𝘰𝘯 𝘰𝘯𝘭𝘺. 𝘐𝘵 𝘪𝘴 𝘯𝘰𝘵 𝘢𝘯 𝘰𝘧𝘧𝘦𝘳 𝘰𝘳 𝘳𝘦𝘤𝘰𝘮𝘮𝘦𝘯𝘥𝘢𝘵𝘪𝘰𝘯 𝘵𝘰 𝘣𝘶𝘺, 𝘩𝘰𝘭𝘥 𝘰𝘳 𝘴𝘦𝘭𝘭 𝘢𝘯𝘺 𝘪𝘯𝘷𝘦𝘴𝘵𝘮𝘦𝘯𝘵, 𝘯𝘰𝘳 𝘭𝘦𝘨𝘢𝘭, 𝘵𝘢𝘹, 𝘰𝘳 𝘧𝘪𝘯𝘢𝘯𝘤𝘪𝘢𝘭 𝘢𝘥𝘷𝘪𝘤𝘦. 𝘗𝘢𝘴𝘵 𝘱𝘦𝘳𝘧𝘰𝘳𝘮𝘢𝘯𝘤𝘦 𝘪𝘴 𝘯𝘰𝘵 𝘪𝘯𝘥𝘪𝘤𝘢𝘵𝘪𝘷𝘦 𝘰𝘧 𝘧𝘶𝘵𝘶𝘳𝘦 𝘳𝘦𝘴𝘶𝘭𝘵𝘴.
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