The iShares MSCI Europe Financials ETF (NasdaqGM: EUFN) is trading higher by 1.2% Friday, which could be interpreted as a positive sign ahead of Sunday’s release of the European Central Bank’s results for the Comprehensive Assessment of the financial market, or bank stress-tests.

EUFN’s Friday showing is made all the more impressive when considering the Wall Street Journal reported earlier today that about 25 banks failed the ECB’s stress tests.

“Of these banks, 11 or 12 still have additional capital needs, according to the person familiar with the matter. There are no German or French banks among those dozen or so lenders, though there are Italian banks,” reports Brian Blackstone for the Journal, citing a person familiar with the matter.

It is good news that there are no German or French banks on the ECB list of offenders because those are the region’s two largest economies. EUFN, which is not a dedicated Eurozone ETF, allocates 11.3% of its weight to France and 9.8% to Germany. [ETFs for the ECB Stress Test]

However, the specter of problems at Italian financial institutions could explain why investors have cooled on the iShares MSCI Italy Capped ETF (NYSEArca: EWI). EWI, the lone Italy ETF, is, to its credit, trading higher by 1.2% today.

However, that should not obfuscate the ETF’s potential vulnerability to bad news for Italy’s banking system. While EWI’s largest individual holding by far is oil giant Eni (NYSE: E), the ETF’s largest sector allocation is financial services at 36.7%. That is about 1,730 basis points more than the ETF devotes to the energy sector.

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