Crispin Odey: Banks ‘luring investors to their deaths’ like fading department stores
Renowned hedge fund manager Crispin Odey told investors in his hedge fund that the banking sector giants now resemble struggling department stores, luring investors to a sticky end with an outdated business model.
Banks' profits are under threat from smaller fintech rivals who have targeted areas where lenders have traditionally charged large fees, Odey said.
“They have been the serial lagging sector, luring every year value investors to their deaths," he wrote in a letter to investors, Bloomberg first reported.
“Banks are watching all their profitable activities – foreign exchange, consumer finance, small company lending – being taken away by fintech companies and peer-to-peer lenders," Odey said.
“This is frightening for investors because it does not make for repeatable economic growth."
Many of the fintech firms which have sprung up in recent years target one aspect of banking or financial services, focusing on more efficient and easier delivery. For instance, fast-growing app Revolut started as a foreign exchange payments provider, while digital-only bank Starling now offers consumer loans.
Odey also took aim at Tesla, saying the electric car company "feels like it is entering the final stages of its life".
Odey is known for being one of the most bearish investors in the City, with Tesla one of his fund's short bets. He gained notoriety in recent years after backing the Brexit vote and correctly predicting its outcome, although he lost large amounts of money when the stock market rallied.
The manager expects sterling to fall further in the run-up to the UK's departure from the EU in March 2019, he said earlier this month.