AFP, Geneva: Berlin is suing one of Switzerland’s largest banks in its bid to recuperate hundreds of millions of euros that went missing during the reunification of East and West Germany, the bank said Thursday.
Julius Baer told AFP it was being sued by Germany for 110 million Swiss francs (91 million euros, $120 million), plus interest, over allegations a bank it later bought had allowed cash to be withdrawn illegally. “The bank denies the claim and has taken measures to protect its interests,” spokesman Jan Vonder Muehll 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 Zurich court last week charging that Cantrade, a bank bought by Julius Baer in 2005, had not stopped a former top East German official from illegally taking money.
Vonder Muehll insisted, however, that Switzerland’s largest bank UBS, which sold Cantrade to Julius Baer, 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 euros ($337 million) in compensation for allowing Steindling to withdraw cash.
Steindling, who died in Israel in 2012 and was known to have a penchant for Channel suits, never revealed what she had done with the money.
In no way we can say the banking sector is in discipline, says former BB Governor
BB Governor Atiur Rahman is seen among the senior executives of different banks in Dhaka yesterday
Bangladesh Bank Governor Atiur Rahman categorically said yesterday that discipline has been restored in the country's banking sector as he outright turned down the allegations of having indiscipline and disorder in the sector.
His remarks emerged at a function in Dhaka in the wake of rising concerns over the scam-hit banking sector. Former central bankers, however, refuted the claim and said the banking sector is still in disarray.
The central bank governor was addressing a signing ceremony on using the refinancing fund worth Tk200 crore for Tk10 account holders held yesterday at its headquarters.
“Those, who are thinking that the country's banking sector is not yet disciplined, are mistakenly using the term indiscipline,” Atiur told the function. “Banking sector may face different kinds of problems but it is important to see whether the banks are now working towards their main objectives.''
To defend his claim, he explained the call money rate remained at around 7% even before the last Eid festival when total transaction stood at around Tk55,000 crore. “Now tell me what does it mean? Is it an indicator of stability or instability?” he posed a question to the audience, apparently seeking its recognition to what he claimed discipline restored in the banking sector.
He also demanded that financial stability came in the country's economy only due to giving importance on financial inclusion by Bangladesh Bank.
The BB governor recently came under wide criticism by the country's leading economists due to the central bank's relaxed loan reschedule policy, which mainly went in favor of the corrupt people.
The governor had awarded the facility to help banks reduce the burden of non-performing loans and facilitate the central bank to present an improved discipline in the financial sector.
But the rate of NPL rose further in the following two quarters, after temporarily going down to some extent last year ended in December.
The default loans of total outstanding dropped to 8.93% in December last year from 12.79% in September. But, the NPL rose further to 10.45% in March and 10.75% in June, according to the Bangladesh Bank data.
What seasoned bankers say?
“In no way we can say the banking sector is in discipline,” said Salehuddin Ahmed, former governor of Bangladesh Bank. “It is now completely disrupted due to lack of management and efficiency.”
He said internal governance has almost collapsed and the norms are not being properly complied with.
Currently, he added, it cannot be said the banking sector is in discipline with having lack of corporate governance, transparency and efficiency.
Former Deputy Governor of the central bank Khondkar Ibrahim Khaled said the recent scams that took place in BASIC and Sonali Bank were due to lack of discipline.
The government, however, is still continuing to recover the banks through removing BASIC Bank Chairman and restructuring Sonali Bank. “But it will not be possible to bring discipline in the banking sector until the establishment of good governance.”
BB Deputy Governor SK Sur Chowdhury presided over the function while Executive Director Mahfuzur Rahman was present along with managing directors of 10 banks.
From now on, workers and marginal farmers, holding Tk10 account could get loan at a lower interest rate directly from the bank or through recognised micro finance institutions.
The number of Tk10 account holders stood at around 1.4 crore in June, according to the Bangladesh Bank data.
“It will increase soon as the agriculture ministry decided to issue more agriculture card. We will also increase the limit of revolving refinancing fund while the card will be issued,'' said Atiur.News:Dhaka Tribune/22-Aug-2014
The agreement was signed at a function at the BB’s head office in Dhaka recently, said a press release.
The conference was held at Jamuna Resort in Tangail, said a press release.
Engr. Md. Eskander Ali Khan, Chairman, Executive Committee of the bank was present in the conference as chief guest.
Presided over by Mohammad Abdul Mannan, Managing Director of the bank the conference was attended by Md. Shamsuzzaman, Md. Nazrul Islam Khan, Md. Motiar Rahman, Executive Vice Presidents, Dr. Md. Kamal Uddin Jasim, Senior Vice President.
Officials including heads of 18 branches and manager operations of the bank were also present.
Uncertainty over an independent Scotland’s currency could lead to “capital flight” from the country, the chairman of HSBC has claimed.
Writing in the Telegraph, Douglas Flint said supporters of independence were “advocating a giant step into economic uncertainty”.
Mr Flint donated £25,000 to the Better Together campaign last year.
Yes Scotland argued that a currency union was in the interests of Scotland and the UK, and would be agreed.
Currency has been a major issue in the independence debate ahead of the 18 September referendum.
The Scottish government has proposed continuing to use sterling in a formal currency union with the rest of the UK if voters back independence.
But the UK government and the main Westminster parties have said they would rule out such a deal.
Alternatives could include “sterlingisation” – using sterling without the Bank of England as lender of last resort – joining the euro or setting up a separate Scottish currency.
Pro-Union campaigners have pressed First Minister Alex Salmond to set out a “Plan B” but he has refused to do so, insisting that the UK government would negotiate a currency union if there is a “Yes” vote.
Mr Flint, who is group chairman of HSBC Holdings and describes himself as an “exiled Scot”, wrote: “It is hard to imagine Scotland without the anchor of financial stability that it derives from sterling currency union.
“That is why the pro-independence campaign would like to recreate a currency union in the event that Scotland separates from the rest of the UK.
“If there was a better alternative that improved the future prospects of Scotland it would surely have been promoted vigorously.”
He added: “The alternatives to a currency union include a completely independent currency, passive acceptance of a monetary policy designed in London for the rest of the UK, or, assuming Scotland rejoins the European Union, eventual membership of the euro.
“In all these circumstances, the transition from the existing currency union would be complex and fraught with danger.
“At the extreme, uncertainty over Scotland’s currency arrangements could prompt capital flight from the country, leaving its financial system in a parlous state.”
HSBC is the second largest bank in the world but has a relatively small presence in Scotland, with 10 branches.