Fisher Investments Research Alert on European Banks

Sept. 7, 2011 - PRLog -- Fisher Investments released a new research paper on the current state of European banks. The report provides an in-depth analysis of the financial health of European banking institutions and discusses their potential impact on the global economy.

Specifically, the piece examines two commonly discussed evaluation metrics for financial institutions—liquidity and leverage—concluding the European banking system is much stronger today than in 2008.

In its discussion of the improving liquidity of European banking institutions, the research piece explains, “banks have increased the more stable, long-term liabilities from less than 20% of total liabilities (a post-euro low) to more than 23% (a post-euro high). They’ve also reduced short term liabilities from about 28% to a post-euro low of around 23%.” With regard to the leverage exposure of European banks, the research alert details, “Banks globally have reduced leverage considerably, as demonstrated by the asset/capital leverage multiple, which indicates leverage has been reduced from 18.5x to roughly 14.5x. Moreover, not only have banks been reducing leverage, but they’ve been stockpiling large swaths of cash. In fact, the average four-quarter cash balances of 27 banks in the MSCI EMU Bank index have nearly tripled since 2006!”

In explaining their argument that the European banking system is much better positioned today than during the height of the financial panic, Fisher Investments explores the current environment of long and short term liabilities, reliance on foreign funding, and leverage. The full commentary, which comprehensively explores the previewed topics and more, can be found here: http://fisherinvestments.bo.lt/eurobanks.

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About Fisher Investments

Founded in 1979, Fisher Investments is an independent, privately-owned money management firm with more than $44 billion (as of 6/30/11) under management. Fisher Investments maintains two principal business units, Fisher Investments Institutional Group and Fisher Investments Private Client Group, which serve a global client base of diverse investors. Fisher Investments' clients include over 100 large institutions and over 25,000 high net worth individuals. Founder and CEO Ken Fisher has written the Forbes "Portfolio Strategy" column for 26 years, has written 7 books on investing and personal finance (4 of which are bestsellers), and was recently named by Investment Advisor magazine as one of the 30 most influential industry individuals in the last 30 years (Thirty for Thirty, May 2010). For more information visit http://www.fisherinvestments.com/.