So far, most investors have focused on Commerzbank s problems. But HVB, Germany s second biggest bank, is doing no better. By some measures, its capital position is even worse.
It is easy to see why they are tempted to respond, especially when jobs are at risk. But it is counterproductive for governments to intervene to protect specific institutions.
At current prices, BNL is cheap. Even if its earnings don t recover, Unicredito could pay a chunky premium and still make a decent return. But price is likely to be a sticking point, which may help explain Unicredito's coyness.