The stock of BMPS, the world's oldest bank which has become the eurozone banking sector's problem child, rose over 10 percent at the opening on news of the plan, which could turn out to be a welcome alternative to drastic restructuring measures demanded by the European Central Bank.
It settled at €0.31, up 6.5 percent on the day, by mid-morning.
The ECB told BMPS, Italy's third-biggest bank, this month that it must offload €9.6 billion of non-performing assets within two years.
The bank, working with US bank JP Morgan and Italy's Mediobanca, has submitted a plan to shift the bad loans with the help of the Atlante fund, created specifically to take on doubtful banking assets.
The plan also calls for a capital increase of five billion euros to boost capital reserves.
But late Thursday, BMPS said it had received an alternative proposal from Corrado Passera, a former chief executive of the Intesa Sanpaolo bank and ex-minister for economic development and UBS.
The bank's board, which meets on Friday to approve first-half results, will now look closely at the proposal, which came as a complete surprise to financial markets.
“The board quickly launched a series of in-depth preparatory studies” to analyse the proposal, BMPS said.
At the end of that process, it will inform markets of its conclusions, the bank said.
Later on Friday, BMPS will the focal point of stress test results for Europe's top banks to be published by London-based European Banking Authority at 11 PM.
The tests for 51 banks from 15 European countries, representing 70 percent of Europe's banking assets, will be a key measure of the sector's stability.
BMPS, whose stock has fallen by over 80 percent over the past 12 months, is seen as particularly vulnerable.
Italian daily Il Sole 24 Ore said BMPS will come out as the worst performer by far among Italy's five major banks.
EUROPEAN UNION
New rescue plan sends shares Italy’s oldest bank soaring
Shares in Monte Paschi di Siena (BMPS) soared on the Milan stock exchange Friday, boosted by a possible new lifeline tabled by a veteran Italian banker and Swiss giant UBS.
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.
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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