The emigration of the money market funds | FT Alphaville

The emigration of the money market funds

And we thought the Mediterranean was nice this time of year.

Research released by Fitch on Friday shows how the ten largest US MMFs have eroded their exposure to banks in peripheral Europe during the last few years.

Note that Irish exposure actually increased sharply in H1 2008, shortly before the first of the government’s bank bailouts. Portugal has – unsurprisingly given the size of its banking sector – barely registered.

And, as you can see, exposure to Spanish and Italian banks has fallen every six months since H2 2008 and H1 2009, respectively. Not a good sign.

But also not hugely surprising, of course, given the ostensibly conservative nature of MMFs and the wake-up call they received during the financial crisis.

Speaking of which, Fitch also includes this interesting table, showing just how MMF exposure to individual banks has changed since H2 2007:

That’s revenge for you.

Related links:
US banks have $176bn in exposure to troubled Europe, BarCap says – FT Alphaville
Money market funds meet moral hazard – FT Alphaville