It's probably not a surprise to many market observers, but
Google Trends shows searches for the phrase "bank
run" have reached record levels
. The phrase "Spanish banks" has seen exponentially higher search
volume in recent days as well. In fact, searches for that phrase
have been far higher in recent weeks than they were in July 2011
when five Spanish banks failed stress tests.
To say a run on Euro Zone banks is a legitimate possibility
might be understating the matter. Withdrawals from Greek banks
have averaged 2 to 3 billion euros per month for about two years,
according to Dr. Jeff Lewis
Of course, it's not just Greece. Last month, global financial
markets were shaken by news that Spanish citizens were pulling
over $1 billion out of Bankia, the now nationalized Spanish
lender. Cross-border lending by global banks plunged by almost
$800 billion in the fourth quarter of 2011 as deposits were
pulled from PIIGS and other Euro Zone banks
according to the Bank for International
It's understandable why Greece, Spain and friends are being
hit by massive withdrawals. Any country that departs the euro to
go back to a previously used currency will see the value of its
bank deposits and currency plunge. By some estimates, a new
drachma would mean Greeks would see their deposits and assets
lose 60% of their value.
Even from across the Atlantic, investors can profit from this
trend with the following ETFs.
iShares MSCI Spain Index Fund (NYSE:
long been bearish on EWP, the lone Spain ETF, and
that view has been rewarded with a plunge of about 27%
While EWP has started to perk up in recent days (can you say
dead-cat bounce?), being long a country ETF that devotes over 41%
of its sector weight to financials when that country's banking
system is in crisis is not a wise idea. As long as Spanish banks
need to be recapitalized and as long as that plan doesn't come to
fruition, EWP can only be played from the downside.
iShares MSCI Austria Investable Market Index Fund (NYSE:
In defense of EWO, which is 31.3% allocated to financials,
Austria is still an AAA-rated country. It should also be noted
that Austrian banks probably won't see a run on them that reminds
global investors of Greece or Spain, but Austrian banks are
struggling with loans to Eastern European nations such as Hungary
and Ukraine made prior to the financial crisis.
Those loans looked like good bets back then, but now, not so
much and Austrian banks are believed to be struggling to meet the
new standards set forth by Basel III.
Global X FTSE Nordic Region ETF (NYSE:
EWO and EWP are current losers due to the calamitous state of
affairs among European banks, but the Global X FTSE Nordic Region
ETF is a potential winner. It has been noted that some
Spanish and Greek withdrawals have been deposited
in Scandinavian countries
. That's good news for GXF, which allocates 30% of its weight to
iShares MSCI Sweden Index Fund (NYSE:
Norway and its banks are strong, healthy and have been attracting
deposits from peripheral Euro Zone countries, but the two Norway
ETFs available to U.S. investors skimp on bank stocks in favor of
the energy sector. So for those that want country-specific
exposure to strong European banks, the iShares MSCI Sweden Index
Fund makes sense.
Swedish banks are viewed as among the strongest in the world
and EWD features an almost 25% allocation to that sector with a
decent yield of 3.65%.
For more on European ETFs, please click
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.