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FINANCE

Reporter meets one of ‘Germany’s dumbest bankers’

With Germans wondering how employees at the KfW bank came to sink over €300 million ($500 million) into Lehman Brothers just hours before the Wall Street firm collapsed, one paper has gone straight to the source.

Reporter meets one of 'Germany's dumbest bankers'
Photo: DPA

In its Sunday edition, the Bild describes how one of its reporters attempted to interview Rainer Hartje, one of the three KfW employees the paper has dubbed “Germany’s dumbest bankers.”

Hartje, a risk controller at the bank, has been suspended along with two colleagues from the bank’s management board, Detlef Leinberger and Peter Fleischer. The three men have been deemed responsible for the blunder last Monday which saw €317 million transferred to Lehman Brothers after it was clear that the US firm was filing for bankruptcy.

Bild said it wanted to find out how someone feels when they’ve made such a sizeable blunder. On the first attempt to speak with Hartje, the paper’s reporter only succeeded in getting a door slammed in his face.

But the paper wrote that on the second attempt, Hartje apologized for having been so unfriendly.

“You have to understand, though, that given the current situation, I can’t tell you anything,” he reportedly said.

When asked how he was doing, he could only shrug his shoulders. Asked if he felt like a pawn, the risk controller gave a small smile and repeated his statement that he couldn’t comment, the paper said.

In July, KfW and Lehman Brothers agreed on a “swap” transaction to protect themselves from exchange rate risks, Bild reported. It was agreed that on September 15, KfW would transfer €317 million to the US bank in exchange for dollars. By September 12, it was clear that Lehman Brothers was in serious trouble and KfW decided to stop any more transfers.

But on Monday, September 15, the transaction went ahead as planned and it seems unlikely that KfW will be able to recoup its losses. The currency swap is now under investigation.

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.

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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