[maddermax]

Is not the magical banner a magical item?

FotBG say 'character may not equip magic items but gains'...

I'm really sorry, I should have made that clear.

If the gift says no magic items, that means he can't have a magical banner. The Blood God would be most upset if you tried to give him one

In RAW terms it's like this - "the BSB can have a magical banner", fury of the blood god says "the character cannot carry any magic items". In this case, the wording of FotBG overrules the option to choose a magic banner.