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Italy’s biggest bank expects to report €11.8bn loss

Italy's biggest bank UniCredit warned on Monday it expects to report a loss of 11.8 billion euros for 2016, as the troubled lender scrambles to launch a massive recapitalization effort.

Published: 31 January 2017 08:53 CET

Italy's biggest bank expects to report €11.8bn loss

File photo of the UniCredit logo at its headquarters: Giuseppe Cacace/AFP

UniCredit saw its share price nearly halved last year, though it managed to claw back 25 percent of its value over the past three months, particularly after the unveiling of a new strategic plan in December.

The 11.8 billion euro ($12.6 billion) loss includes 12.2 billion euros' worth of “negative non-recurring items” that were disclosed in December and a further 1.0 billion euros in additional one-off losses, the bank said in a statement.

Without these, the net result for 2016 would have been positive, the bank said. Preliminary results will be published on February 9th.

Earlier this month shareholders approved a rights issue aimed at raising 13 billion euros.

New chairman Jean-Pierre Mustier has said it would take place before March 10th, but press reports suggest it could be launched as early as next week, with a view to completing it by the end of February.

Mustier, who took over in July, has spearheaded a major strategic review that has so far involved selling off assets to strengthen the bank's capital base.

UniCredit has said it will shed around 14,000 jobs by the end of 2019 as part of a cost-cutting drive, estimating this would save 1.1 billion euros.

Italy's banking sector has suffered a nightmare year, notably for Monte dei Paschi di Siena (BMPS), the world's oldest bank, which is set to be nationalized after a failed recapitalization bid in December.

Investor confidence in Italy was shaken by the collapse of Matteo Renzi's government late last year, although the situation eased late last month after the government approved a 20-billion-euro bailout plan to rescue the country's struggling banks.

By Celine Cornu

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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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