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FRANKFURT

Shares up as Allianz nears Dresdner deal

Shares of both insurer Allianz and lender Commerzbank got a boost Monday amid widening reports the latter is about to relieve the former of its cumbersome Dresdner Bank division.

Published: 25 August 2008 17:40 CEST
Shares up as Allianz nears Dresdner deal
Photo: DPA

Allianz shares closed 3.1 percent higher while Commerzbank finished the day 4.6 percent up.

Commerzbank and Allianz have been negotiating for months about a possible purchase of Dresdner by Commerzbank and Sunday newspaper reports say a deal may be announced as early as this week.

Allianz is likely to retain 30 percent of Dresdner after an acquisition and Commerzbank plans on also taking on the insurer’s Dresdner Kleinwort investment bank, according to Euro am Sonntag. Significant synergies are possible by firing overlapping, highly paid investment banking positions, according to the paper.

A long overdue consolidation of Germany’s banking landscape has picked up steam this year after France’s Crédit Mutuel Group agreed to buy Citigroup Inc.’s German retail banking activities for €4.9 billion.

German regulations ensure that the country’s crowded banking market offers too few customers to privately owned institutions. Laws prohibit mergers between government, cooperative and private banks and the Germans themselves prefer the appearance of safety offered by state-backed banks.

This has led analysts to call for mergers between private banks to lower per-customer costs and increase profits.

In addition to the Dresdner Bank sale, Deutsche Post is also trying to sell its Deutsche Postbank subsidiary – Germany’s biggest retail bank – most likely to Deutsche Bank while the German government last week agreed to sell its troubled IKB Deutsche Industriebank to Texas financial investor Lone Star Funds.

Munich-based Allianz paid €24 billion for Dresdner seven years ago in hopes of cross selling insurance policies and car loans. But that benefit never developed and Dresdner’s losses forced Allianz to begin shopping the bank – for a reported €8 billion.

Earlier this month Dresdner said it had slipped to an operating loss of €566 million in the second quarter.

That Commerzbank may attempt to swallow Dresdner Kleinwort is unexpected. Some reports suggested Allianz might try to sell it separately since the division’s high-powered investment bankers – fearing for their jobs – scuppered a proposed merger with Deutsche Bank eight years ago.

Neither Commerzbank nor Allianz would comment on the reports.

Allianz shares added €3.27 to close at €107.46 while Commerzbank ended the day at €20.51, €0.90 above Friday’s close.

BANKING

Card over cash? Why Germany is seeing a new payment preference

Cash has long been king in Germany, with many smaller retailers refusing to join the rest of the world in adopting contactless payment systems. But card-based payments are on the rise, as recent stats about Girocard use reveal.

Published: 13 February 2024 12:31 CET
Card over cash? Why Germany is seeing a new payment preference

Germany has long been a very cash-based country, occasionally to the dismay of frustrated tourists at the Döner shop.

A few German phrases express the people’s love of physical money. There’s ‘only cash is true’ – Nur Bares ist Wahres. Or Bargeld lacht, literally meaning cash laughs, but used to imply that cash is what’s wanted, similar to ‘cash is king’ in English.

But the classic German preference for cash appears to be evolving, as the use of girocards is growing, even for small transactions.

How are girocards being used?

Girocard, an ATM and debit card service offered by German Banks, was designed to allow customers to use virtually all German ATMs and, increasingly, to make purchases at businesses.

READ ALSO: Ask an expert – Why is cash still so popular in Germany, and is it changing?

Last year, consumers in Germany used their Girocard more often than ever before for cashless payments. A total of €7.48 billion payment transactions with the plastic card were counted – 11.5 percent more than in the previous record year 2022, according to figures published by the Frankfurt-based institution Euro Card Systems.

Whether at the bakery, petrol station or supermarket, customers are increasingly pulling out their cards at the checkout, even for smaller amounts. As a result, the average amount paid with the Girocard fell from €42.34 to €40.69 within a year. 

The rise of card payments in Germany

Contactless payment, which is possible with girocards and credit cards that have an NFC chip, got a boost during the Covid pandemic, as retailers promoted it for hygiene reasons. 

But the use of card payments has continued to grow in Germany since then, boosted partly by the increasing use of girocards.

Promoting the use of girocards, some German banks have expanded their cards’ functions: Sparkassen, Volksbanken, or Raiffeisenbanken offer girocards for the digital wallet, for example.

Banks want to continue upgrading the payment card with further applications. For example, a project is being tested which would add an age verification function to girocards that would be useful when a customer is buying cigarettes.

On the retail side, it’s clear why the Girocard is preferred to other debit options.

“We see that debit cards from international providers cost up to four times more,” Ulrich Binnebößel, Head of the Payment Systems & Logistics Department at the German Retail Association (HDE) told DPA.

What’s the difference between the Girocard and other debit?

The Girocard is a strictly German phenomenon. It can be seen as the latest iteration of the EC card, which was created to consolidate payment systems following the unification of former East and West Germany.

In 1991 different debit card systems, including Eurocheque guarantee cards from former West Germany and Geldkarte ATMs from former East Germany, were unified into Eurocheque cards.

Then in 2001, the Eurocheque system was disbanded, but German banks continued to use the EC logo for “electronic cash’” cards, or EC cards. In 2007, the German Banking Industry Committee introduced Girocard as a common name for electronic cash and the German ATM network.

Girocards are only issued and accepted in Germany, so if you want to get one of your own, you’ll have to join a German bank, and shell out those notorious German banking fees.

READ ALSO: Why it’s almost impossible to find a free bank account in Germany

Alternatively, you can get by with internationally accepted debit cards provided by a bank in your home country, or otherwise by joining an app-based European banking service like N26. 

But be warned, without the Girocard in hand, at some smaller retailers you may be told, “Leider nur Bargeld oder EC-Karte.”

With reporting by DPA

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