Commerzbank now a candidate for a big bailout (CRZBY, CRARY, UNCFF)

Based on the stock prices and the trajectory, Wall Street certainly does not deem any rescue plausible enough now to place more than speculative money on Commerzbank AG (CRZBY, quote) as well as Credit Agricole (CRARY, quote) and Unicredit (UNCFF, quote).

In a recent article in Financial Times by Gerritt Wiesmann and James Wilson, “Commerzbank faces bail-out,” it was reported that “The German government has begun preparations of a possible state bail-out of Commerzbank if it fails to present a convincing plan by January 20 to fill a E5.3 billion capital gap identified by regulators.”

There has been nothing “convincing” about Commerzbank AG (CRZBY) of Germany, Credit Agricole (CRARY) of France, or Unicredit (UNCFF) of Italy as all are down sharply for the 52-week period.

The recent stress test by the European Banking Authority has Commerzbank in a desperate scramble for capital.  One plan, as reported in the Financial Times, is for Commerzbank “offload Eurohypo, its property subsidiary weighed down with sovereign debt.” 

As Chintian Joshi, an analyst with Nomura noted, this would be a “straight bailout.”  Joshi furthered that, “We do not think Germany can provide can provide lucrative bail-out to Commerzbank in the current climate.”



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