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After looking at this stunning Euro Zone Bank Stress Test tool provided by Reuters, I see the danger and the hight level of interconnections that exists among Banks in EU.

The actual scenario (default setting for the tool) shows a need for recapitalization of about 90 billions, if you trigger a 25% haircut on the Italian debt and 25% on the Spanish one and 100% on the Greek one the recapitalization would be worth an astronomic figure of 200 billions, with almost 60 Banks not passing the test.

Here in Italy I heard people talking about opening bank accounts abroad like in Germany or Switzerland, but looking again at the tool I can see that some of the banks that would need huge recap (besides the Italian Unicredit and Spanish La Caixa, Bankia banks) seem to be just German banks (almost top of the list): Commerzbank, Deutsche Bank. So I don't see anymore how it could be considered safe to move money in soem German bank.

I was then thinking to buy defensive stocks, I think these type of stocks are like NESTLE, COCA COLA, PROCTER AND GAMBLE basically food and products found in supermarket (correct me if I'm wrong).

  1. Where can I find a list of defensive stocks, maybe with an history of good dividends?

  2. If you had a bank account in EU, and you would look to secure in some way your savings from a possible EURO fall/Bank run, would you think that buying defensive stock now would be a better strategy rather than moving money abroad in UK or Switzerland?

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    I have taken the liberty of editing your question's title to clarify your goals to casual browsers of the question list. Hope you don't mind.
    – user296
    Commented May 22, 2012 at 23:30
  • @fennec: I'm not native English speaker as you probably noted, your edit make a lot of sense to me. Thank you I really appreciated it.
    – Marco Demaio
    Commented May 23, 2012 at 10:18

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You're talking about money in a savings account, and avoiding the risks posed by an ongoing crisis, and avoiding risk. If you are risk-averse, and likely to need your money in the short term, you should not put your money in the stock market, even in "safe" stocks like P&G/Coca-Cola/etc. Even these safe stocks are at risk of wild price swings in the short- to intermediate-term, especially in the event of international crises such as major European debt defaults and the like.

These stocks are suitable for long-term growth objectives, but they are not as a replacement for a savings account. Coca-Cola lost a third of its value between 2007 and 2009. (It's recovered, and is currently doing better than ever.) P&G went from $74/share to $46/share. (It's partially recovered and back at $63). On the other hand, these stocks may indeed be suitable as long-term investments to protect you against local currency inflation. And yes, they even pay dividends.

If you're after this investment, a good option is probably a sector-specific exchange-traded fund, such as a consumer-staples ETF. It will likely be more diversified and safer than anything you could come up with using a list of individual stocks. You can also investigate recommendations that show up when you search for a "defensive ETF". If you do not wish to buy the ETF directly, you can also look at listings of the ETF's holdings. Read the prospectus for an idea of the risks associated with these funds. You can buy these funds with any brokerage that gives you access to US stock exchanges.

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  • I would definitely prefer an ETF, I always preferred ETF over direct stock picking, but with a possible Euro crisis (i.e EU bank crisis) many of these ETF are issued by European Banks: i.e lyxoretf.com issued by Societe Generale Group which is at the 9th place (SocGen) in the list of the tool graphics.thomsonreuters.com/11/07/BV_STRSTST0711_VF.html (5 billion recap needed) About this subject I asked this other question money.stackexchange.com/questions/15067/… but it was closed.
    – Marco Demaio
    Commented May 23, 2012 at 10:27
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    While the ETF may be organized by a bank, they're generally going to be structured as legally distinct entities - at least, in the United States. I'm not sure of the situation outside of the US, but you probably shouldn't expect them to loot your ETF for money to pay off creditors in bankruptcy. Your ETF should hold actual bona fide stocks, and routinely report on their value. ... Then again, MF Global illegally raided its customers' accounts shortly before bankruptcy, so that's a cautionary tale.
    – user296
    Commented May 23, 2012 at 19:55

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