You manage a German bank. You follow strict capitalisation rules, are careful about the loans you make and operate your business according to the highest principles.

You clients start doing more and more of their business with an Italian bank that has poor capital reserves and a shoddy loan book and is losing money, but offers better terms to customers. The bank looks like it's going to fail, so the Italian government props it up with cheap credit and buys it's bad loans at above market rates so that it can stay in business - and keep winning business off you because it's still offering better terms to customers. Plus now those customers know the bank won't go bust and they can rely on it because the Italian government will support it no matter what.

The customer's business is being indirectly subsidised by the Italian government through below-market banking fees. Why should they ever do business with you again?