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SWITZERLAND

Deutsche Bank reveals more subprime-related writedowns

Deutsche Bank, Germany's largest bank, unveiled more asset writedowns linked to the subprime lending crisis on Tuesday, but the amount paled in comparison to one announced by Swiss bank UBS.

Deutsche Bank reveals more subprime-related writedowns
Trying to make Deutsche Bank shine again. Photo:dpa

The Frankfurt-based bank said it estimated first-quarter writedowns would reach roughly €2.5 billion ($3.9 billion) due to bad loans in the housing sector.

It’s announcement came after UBS said it would take a second round of provisions amounting to about $19 billion, the single biggest hit so far from a financial crisis that was sparked by the collapse of the US market for high risk, or subprime, mortgages.

UBS had already written down $18.4 billion in 2007, while Deutsche Bank had said it written down €2.2 billion in the third quarter but just €50 million in the fourth quarter, and appeared to have escaped the worst of the the storm.

Several public German banks are among the banks hardest hit by the subprime crisis, with business lender IKB on life support from the state and public savings banks, and regional bank SachenLB rescued through a takeover by peer LBBW. The second-biggest German bank, Commerzbank, took provisions totalling €583 million last year to cover possible losses from the debacle.

Financial markets erupted after the US subprime market collapsed because many of the mortgages on which US borrowers defaulted had been repackaged and sold as securities to banks and other financial institutions around the world. Credit markets then dried up after banks were unable to accurately estimate potential losses and became wary of lending to one another, a situation that prevails to this day.

On Tuesday, Deutsche Bank said the sharp jump in “mark-downs” was “related to leveraged loans and loan commitments, commercial real estate, and residential mortgage-backed securities.”

“Conditions have become significantly more challenging during the last few weeks,” it added.

Deutsche Bank said its chairman Josef Ackermann would address an investor conference in London later in the day and comment on the current “operating environment.”

Official first-quarter earnings are to be reported April 29. Shares in Deutsche Bank leapt by 2.85 percent to €73.74 in midday Frankfurt trading Tuesday, while the Dax index of leading shares showed an increase of 1.41 percent overall.

Dealers and traders said the bank’s latest writedown fuelled hopes that the worst of its problems might be over, noting the comparison with UBS. Deutsche Bank had warned last week it might miss 2008 earnings targets due to the international financial turmoil.

The bank is aiming for pre-tax profit of €8.4 billion, down slightly from €8.7 billion last year, it said in its annual report.

In 2007, Deutsche Bank posted a record net profit of €6.5 billion after managing to avoid massive losses that hit other major banks following the collapse of the US market for high-risk home loans.

This year, however, the bank might not be able to compensate for weaker activity in financial products that helped its investment bank division provide the majority of profits in 2007, it said last week.

Merck Finck analyst Konrad Becker said on Tuesday: “We cannot exclude the possibility that Deutsche Bank will release a negative pre-tax result for the first quarter, but we think it is unlikely.”

The private bank said it maintained its ‘hold’ recommendation on Deutsche Bank shares, “as we think the burdens deriving from the financial crisis can still not be quantified yet.”

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Cashless payments in Switzerland: What is Twint and how does it work?

If you live in Switzerland, you are likely no stranger to Twint and maybe even use it regularly to make and receive payments. But if you are not familiar with this app, this is what you should know.

Twint app can be installed on a mobile phone.
“Twinting” money with a smartphone is easy and convenient. Photo by Andrea Piacquadio from Pexels

In Switzerland, the word “Twint” is used both as a noun and a verb.

As a noun, it describes the mobile application which allows you to pay for various goods and services practically everywhere in the country.

As a verb, (“to twint”), it means to send someone money, or receive it, via the same app.

So what exactly is Twint?

Simply put, it is digital cash (not to be confused with bitcoin, which is digital currency) that was first introduced in Switzerland in 2014 and has become very popular since then.

Twint logo. Image by Twint.ch

People like it because it is an easy and quick way to make instantaneous payments, especially in situations when credit cards or physical cash can’t be used.

A big part of its convenience is that it can be used at cash registers, vending machines and parking meters, as well as in online shops — pretty much everywhere in Switzerland, even in places that don’t accept credit cards.

The only similar mode of payment would be your maestro debit card issued by your bank.

This video explains exactly how the process works.

Another advantage of Twint is that you can use it to send money to someone else’s mobile phone — as long as they also have Twint. And you can receive money the same way.

And there are no fees or charges for this service.

How does Twint work?

Anyone can use Twint, but you need a Swiss bank account or a credit card and, of course, a smartphone.

According to Twint website, you need a smartphone with either an iOS (from version 12.2 and upwards) or Android (from version 7 and upwards) operating system and Bluetooth capability (from version 4.0 and upwards).

“It is generally not possible for Twint to be used on Apple devices with an operating system older than “iOS 12.2” or on Android devices with an operating system older than “Android 7”. On Android devices without access to the Google Play Store (e.g. on certain HUAWEI models), the use of Twint app is also not possible”.

But If you have a compatible phone, installing Twint is easy.

Swiss banks offer their own version of the app, and you can download it directly from your bank’s website.

Then, when you use Twint to make a payment, the amount is debited directly from your bank account or credit card.

By the same token, if you receive payment from another Twint user, the money is automatically deposited in your account.

And you are not limited to just one Twint app.

If you have accounts is several banks, or have more than one credit card, you can install and use all of them.

READ MORE: How to open a bank account in Switzerland

Can Twint be used to make payments and receive money from abroad?

For the moment, Twint can be used solely in Switzerland and payments can be made only in Swiss francs – although this may change in future. 

“We are, however, working closely with providers in other countries to develop an international and multi-currency solution”, according to Twint website.

You can find more information about Twint here.

READ MORE: Which bank is best for Americans in Switzerland?

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