Italy’s Banks: A Conservative Lending Business
From the United Kingdom we travel south to the Mediterranean, where an Italian ETF comprised mainly of financials offers investors an opportunity to participate in some of Europe’s safest banks.
The MSCI Italy Index Fund (NYSE:EWI) holds approximately 40% financials along with a number of utility, energy and other Italian large caps, serving as a proxy for the broader Italian market. Italian banks are currently attractive because they were not exposed to subprime loans in the way many other European nations’ banks were.
Italian banks engage in a far more traditional banking business than their continental counterparts, and therefore don’t assume the risks of brokerages, insurance companies and other specialized financial institutions that require gains from underwriting and investments just to compete. The shares are currently yielding a very safe 5.49% annual dividend and have appreciated by over 60% in just the last eight weeks.