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Germany sues Swiss bank over missing marks

Berlin is suing one of Switzerland's largest banks in its bid to recuperate hundreds of million euros that went missing during the reunification of East and West Germany, the bank said Thursday.

Germany sues Swiss bank over missing marks
Julius Bär bank. Photo:DPA

Julius Bär told AFP it was being sued by Germany for €91 million (110 million Swiss francs), plus interest, over allegations a bank it had acquired had allowed cash to be withdrawn illegally.

"The bank denies the claim and has taken measures to protect itsinterests," spokesman Jan Vonder Mühll said in an email, adding that the bank had informed shareholders of the lawsuit in its last earnings report.

Since East and West Germany were reunified in 1990, the country has launched dozens of lawsuits in various jurisdictions to try to recover money stashed by the former regime.

German authorities filed the suit with a Zürich court last week charging that Cantrade, a bank bought by Julius Bär in 2005, had not stopped a former top East German official from illegally taking money.

Vonder Mühll insisted, however, that Switzerland's largest bank UBS, which sold Cantrade to Julius Bär, should answer the accusations.

The charges centre around colourful Austrian communist Rudolfine Steindling, who headed up East German trading company, Novum.

She transferred the money to several Swiss banks, including Cantrade, and withdrew the cash after the fall of the Berlin Wall.

Germany argues Steindling had no right to the cash, which was amassed by East Germany from fees charged to Western firms, and maintains the Swiss banks should have known that.

German authorities have already successfully sued another Swiss bank, a branch of Bank Austria, itself now part of Italy's UniCredit, in the same case.

That bank was ordered by Switzerland's top court last year to cough up €254 million in compensation for allowing Steindling to withdraw cash.

Steindling, who died in Israel in 2012 and was known to have a penchant for Chanel suits, never revealed what she had done with the money.

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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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