Keefe Bruyette & Woods (KBW) and Nasdaq have launched the KBW Nasdaq Global Bank Index (Ticker:GBKX), the first and only index designed to track the performance of those banks designated as global systemically important (G-SIBs) by the Financial Stability Board and Basel Committee on Banking Supervision.
The 28 banks included in the KBW Nasdaq Global Bank Index represent 45 per cent of the global investable banking universe and account for approximately USD3 trillion in total market cap.
“Global banks trade together, significantly different than their domestic peers and until now, there hasn’t been an index available in the marketplace that exclusively tracks this specific universe,” says Fred Cannon, Global Director of Research at KBW. “The GBKX is a substantial benchmark index, as our research shows G-SIBs trade at a lower valuation than domestic banks, even when adjusting for profitability. This is due to the unique global regulatory structure that G-SIBs operate under that exposes them to additional risks and capital requirements which domestic banks are not restricted by.”
The 28 banks included in the KBW Nasdaq Global Bank Index are: Agricultural Bank of China Limited, Banco Bilbao Vizcaya Argentaria SA, Banco Santander SA, Bank of America Corporation, Bank of China Limited, Barclays Plc, BNP Paribas SA, Citigroup Inc., Credit Suisse Group AG, Deutsche Bank AG, HSBC Holdings Plc, Industrial and Commercial Bank of China Limited, ING Groep N.V., JPMorgan Chase & Co., Mitsubishi UFJ Financial Group, Inc., Mizuho Financial Group, Inc., Morgan Stanley, Nordea Bank AB, Royal Bank of Scotland Group Plc, Société Générale SA, Standard Chartered Plc, State Street Corporation, Sumitomo Mitsui Financial Group, Inc., Bank of New York Mellon Corporation, Goldman Sachs Group, Inc., UBS Group AG, UniCredit SpA and Wells Fargo & Company.
The KBW Nasdaq Global Bank Index is an equal-weighted index that has an average yield of 3.14 per cent (as of 7/7/15). While a US-dollar denominated index, it provides exposure to six different currencies – the US Dollar, Euro, British Pound, Japanese Yen, Swiss Franc and Swedish Krona. The Index will be rebalanced quarterly and members will be updated annually on the third Friday in December based on FSB and the Basel Committee’s update to the list of G-SIBs published in November.
“The KBW Nasdaq Global Bank Index is an incredibly important benchmark for market participants who are interested in monitoring the health of international financial institutions,” says Salil Donde (pictured), Executive Vice President, Nasdaq Global Information Services. “This is the first of many new and innovative products to be developed as a result of our strategic partnership with KBW.”
In addition to the GBKX, there are also two total return versions of the Index that have been simultaneously launched – KBW Nasdaq Global Bank Total Return Index (GBKXT) and KBW Nasdaq Global Bank Net Total Return Index (GBKXN).