Crispin Odey, the high-profile hedge fund manager, has turned bullish on UK banks recently because he thinks their share prices are currently cheap. The founding partner of Odey Asset Management believes that some UK institutions, such as Barclays, will escape nationalisation if the government sets up a so-called 'bad bank' to acquire their toxic assets.

In his annual report to investors, Odey argues that the risk/reward balance of some UK clearing is out of kilter, saying: 'After Northern Rock and Lehman, many are now convinced that they [the banks] will be nationalised. However, the government has realised that nothing is solved by nationalising them, and in the UK's case, that there is everything to be gained from letting them live.'

Odey has made some clever calls in the past. While most hedge funds lost money last year, the firm's European fund rose 10.9 percent, helped by short positions on banks such as Iceland's Kaupthing and Royal Bank of Canada.

However, it's far from clear how many other investors and fund managers agree with Odey. Many believe that the banking sector is still some way from the bottom, and others don't know what to believe. Who's to say that today's bulls will not become tomorrow's bears?