Six ETFs That Will Take a Hit in a European Banking Crisis

Six ETFs That Will Take a Hit in a European Banking Crisis

The financial crisis in Greece has spread to the European financial system, pushing up the cost of borrowing. Several international financial ETFs have high exposure to banks in Europe. Be sure to know what they are.

On Monday, the London interbank offered rate, or Libor—the rate at which banks lend money to each other and a vital sign of their mutual trust—rose to its highest level since last July. In turn, European banks are being forced to pay more for short-term dollar borrowings than others in the United States or Asia, report Carrik Mollenkamp and Randall Smith and David Enrich for The Wall Street Journal.

Lenders are becoming all-too-skeptical about the risks that European banks are infusing throughout the banking system at this point. The Libor’s jump the most pronounced in European banks and borrowing costs are also increasing more quickly there than they are in the United States.


Analysts agree that the markets have already priced in a weaker European banking system. Investors there, however, are feeling that perhaps the governments there have lost their bank-saving appetites, which if true could put them at more risk.


iShares S&P Global Financials (IXG): 46.6%, banks; 25.2%, other financials; 19.6%, insurance; 26% in Europe


SPDR EURO STOXX 50 (FEZ): 29.3%, financials


iShares MSCI United Kingdom (EWU): 21.7%, financials


SPDR S&P International Finance (IPF): 55%, banks; 16.9%, insurance; 8.8%, capital markets; 50% in Europe


iShares S&P Financials Index (EUFN): 56% exposure to European banks; U.K., 28.7%; France, 13.2%; Switzerland, 12%; Spain, 11.8%; Germany, 10.4%


iShares MSCI ACWI ex-U.S. Financials Index (AXFN): 61%, banks; 32.3% in Europe


Tisha Guerrero contributed to this article.
Disclosure: None