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US MMF exposure to European banks holds steady, says Fitch


US prime money market fund (MMF) exposures to European banks held steady as financial conditions in Europe continue to evolve, according to a new report by Fitch Ratings.

Following the reduction of allocations to Eurozone banks that MMFs undertook during the second-half of 2011, funds appear to be following a ‘wait and see’ approach until a clearer pattern emerges in Europe.

Aggregate MMF exposures to European banks declined by 2% on a dollar basis since end-March 2012. Overall European exposure has held steady over the last three months but remains 63% below end-May 2011. Exposure to banks in Australia, Canada and Japan as a group was largely unchanged at 29% of MMF assets under management.

Fitch notes that the preference for secured exposure in the form of repurchase agreements (repos) continues to indicate that MMFs remain generally cautious. In April 2012, repos accounted for a historically high 33% of total MMF exposure to European banks.

The 15 largest exposures to individual banks, as a group, comprise approximately 41% of total MMF assets.
The full report ‘US Money Fund Exposure and European Banks: Holding Pattern’ is available at


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