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Iran sanctions shadow falls on smaller German banks

Germany's biggest lenders have shied away from business with Iran after past penalties for breaching US sanctions, but smaller banks have leapt on opportunities afforded by the nuclear deal rejected by Donald Trump.

Iran sanctions shadow falls on smaller German banks
The European-Iranian trade bank has a branch in Tehran. Photo: European-Iranian Trade Bank.
There are just months to go until a November deadline issued by Washington after the US president abandoned a hard-fought agreement that loosened business restrictions on the Islamic Republic in exchange for Tehran giving up its pursuit of nuclear weapons.
   
But some firms plan to press on in their dealings with Iran despite the looming threat of penalties.
   
“We will continue to serve our clients,” for now, said Patrizia Melfi, a director at the “international competence centre” (KCI) founded by six cooperative savings banks in the small town of Tuttlingen in southwest Germany.
   
The centre, which supports companies operating in sensitive markets like Iran or Sudan, has seen demand “rising sharply in the last few years, from firms listed on the Dax (Germany's index of blue-chip firms), from all over 
Germany and from Switzerland,” she added.
   
German exports to Iran have grown since the nuclear deal was signed in 2015, adding 15.5 percent last year to reach almost 2.6 billion euros ($3.0 billion) after 22-percent growth in 2016.
   
Such figures remain vanishingly small compared with Germany's 111.5 billion euros in exports to the US — its top customer. Nevertheless, the KCI will “wait and see what the sanctions look like” before turning away from Iran, Melfi said.
 
Already, firms dealing with Tehran must take great care not to fall foul of US restrictions. Transactions are carried out in euros, and the KCI does not deal with businesses that have American citizens or green card resident holders on their boards.
   
What's more, products sold to Iran cannot contain more than 10 percent of parts manufactured in the US. One of the most important inputs for the business is “courage among our managers” given the high risks involved, Melfi said.
 
Germany's two biggest banks, Deutsche Bank and Commerzbank, avoid Iran completely after being slapped with harsh fines in 2015 over their dealings there, with Deutsche alone paying $258 million in penalties.
   
DZ Bank, which operates as a central bank for more than 1,000 local co-op lenders, is withdrawing completely from payment services there, a spokesman told AFP.
   
That left KCI to seek out the German branch of Iranian state-owned bank Melli in Hamburg. Even that linkage could break if Iran's biggest business bank appears on a US list of barred businesses as it has before.
   
Meanwhile, among Germany's roughly 390 Sparkasse savings banks, business with the regime is mostly limited to producing documents linked to export contracts.
   
“We will be looking even more closely at those” in the future, a person familiar with the trade told AFP.
   
Elsewhere in the German economy, the European-Iranian Trade Bank (EIH) founded in 1971 is another conduit to Tehran.
   
Also based in Hamburg, it for now remains “fully available to you with our products and services”, the bank assures clients on its website, although “business policy decisions by European banks may result in short term or medium term restrictions on payments”.
 
Neither does the Bundesbank (German central bank) believe that much has so far changed for business with Iran.
   
“Only the European Union's sanctions regime will be decisive”, if and when it is changed, the institution told AFP.
   
Any payment involving an Iranian party would have to be approved by the Bundesbank if things return to their pre-January 2016 state.
   
German banking lobby group Kreditwirtschaft has called on Berlin and other EU nations to clarify their stance — and to make sure banks and their clients are “effectively protected against possible American sanctions”.
   
KCI's Melfi said time is running out for EU governments to act.
   
“Many firms just want to stop anything with Iran, since they can't calculate the risk of staying,” she noted.
 
On Friday for the first time since the Iran nuclear deal came into force in 2015, China, Russia, France, Britain and Germany gathered in Vienna — at Iran's request — without the United States, to discuss how to save the 
agreement.

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Cashless payments in Switzerland: What is Twint and how does it work?

If you live in Switzerland, you are likely no stranger to Twint and maybe even use it regularly to make and receive payments. But if you are not familiar with this app, this is what you should know.

Twint app can be installed on a mobile phone.
“Twinting” money with a smartphone is easy and convenient. Photo by Andrea Piacquadio from Pexels

In Switzerland, the word “Twint” is used both as a noun and a verb.

As a noun, it describes the mobile application which allows you to pay for various goods and services practically everywhere in the country.

As a verb, (“to twint”), it means to send someone money, or receive it, via the same app.

So what exactly is Twint?

Simply put, it is digital cash (not to be confused with bitcoin, which is digital currency) that was first introduced in Switzerland in 2014 and has become very popular since then.

Twint logo. Image by Twint.ch

People like it because it is an easy and quick way to make instantaneous payments, especially in situations when credit cards or physical cash can’t be used.

A big part of its convenience is that it can be used at cash registers, vending machines and parking meters, as well as in online shops — pretty much everywhere in Switzerland, even in places that don’t accept credit cards.

The only similar mode of payment would be your maestro debit card issued by your bank.

This video explains exactly how the process works.

Another advantage of Twint is that you can use it to send money to someone else’s mobile phone — as long as they also have Twint. And you can receive money the same way.

And there are no fees or charges for this service.

How does Twint work?

Anyone can use Twint, but you need a Swiss bank account or a credit card and, of course, a smartphone.

According to Twint website, you need a smartphone with either an iOS (from version 12.2 and upwards) or Android (from version 7 and upwards) operating system and Bluetooth capability (from version 4.0 and upwards).

“It is generally not possible for Twint to be used on Apple devices with an operating system older than “iOS 12.2” or on Android devices with an operating system older than “Android 7”. On Android devices without access to the Google Play Store (e.g. on certain HUAWEI models), the use of Twint app is also not possible”.

But If you have a compatible phone, installing Twint is easy.

Swiss banks offer their own version of the app, and you can download it directly from your bank’s website.

Then, when you use Twint to make a payment, the amount is debited directly from your bank account or credit card.

By the same token, if you receive payment from another Twint user, the money is automatically deposited in your account.

And you are not limited to just one Twint app.

If you have accounts is several banks, or have more than one credit card, you can install and use all of them.

READ MORE: How to open a bank account in Switzerland

Can Twint be used to make payments and receive money from abroad?

For the moment, Twint can be used solely in Switzerland and payments can be made only in Swiss francs – although this may change in future. 

“We are, however, working closely with providers in other countries to develop an international and multi-currency solution”, according to Twint website.

You can find more information about Twint here.

READ MORE: Which bank is best for Americans in Switzerland?

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