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EUROPEAN UNION

EU gives go-ahead to Italian rescue of troubled BMPS, the world’s oldest bank

The EU anti-trust authority approved Italy's massive rescue of the country's troubled third-largest bank, Monte dei Paschi di Siena (BMPS), a statement said on Thursday.

Published: 1 June 2017 12:08 CEST
EU gives go-ahead to Italian rescue of troubled BMPS, the world's oldest bank
The logo of the Monte dei Paschi di Siena bank is seen on the window of a branch in downtown Rome. Photo: Filippo Monteforte/AFP

Founded in Siena in 1472, BMPS has been in deep trouble since the worst of the eurozone debt crisis, with the Rome government set to take a majority stake on a provisional basis to save the bank from bankruptcy.

“This solution is a positive step forward for BMPS and the Italian banking sector,” EU Competition Commissioner Margrethe Vestager said in a statement.

“It would allow Italy to inject capital into BMPS as a precautionary plan, in line with EU rules, whilst limiting the burden on Italian taxpayers,” she added.

Under the deal, the Italian government will inject an unspecified amount of cash after the lender failed to raise funds on the market last year.

In exchange, Rome must accept a drastic EU-approved restructuring plan for BMPS that reports said involves mass layoffs and salary caps for senior managers.

ANALYSIS: Here's what you need to know about the crisis at BMPSHere's what you need to know about Italy's banking crisis
Marco Morelli, chief executive of BMPS. Photo: Giuseppe Cacace/AFP

The ECB in December said BMPS, the world's oldest bank, was short a staggering 8.8 billion euros in capital.

The deal is fraught with political and economic complications for a centre-left government preparing for an election in the coming months.

Weakened by the disastrous purchase in 2007 of the Antonveneta bank, BMPS quickly drifted into scandal when its management team was accused of fraud and misuse of funds.

Reports earlier this year said the heavily indebted Italian government will need to inject some six billion euros in the lender.

The rest will be raised through the forcing private lenders to the bank to become part owners, a controversial process to be overseen by the ECB.

The state of Italian banking sector has become a big worry for the 19-member eurozone, with Rome still failing to resolve the problem of piles of risky loans sitting on bank books.

READ ALSO: How Italy's banking crisis has affected everyday life in SienaHow Italy's banking crisis has affected life in Siena
Photo: Giuseppe Cacace/AFP

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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.

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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