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Wirecard Shares Turns into a Toxic Gambling Stock with Takeover Rumors

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After falling to € 1.28 on Friday, the Wirecard share rears up again today and briefly made the jump above the € 4.00 mark but investors shouldn’t be happy too soon.

As is so often the case with insolvent and crisis-ridden companies, Wirecard investors also grab every straw that promises to be saved from the swamp. In the specific case, it is a message from Saturday, according to which the board believes that a continuation is in the best interest of the creditors.

In the letter, the company affirmed that the business operations of the group companies, including the licensed units, would continue. In addition, it is constantly checked whether bankruptcy applications for subsidiaries of the Wirecard Group have to be made.

Wirecard Bank not affected

Group companies, with the exception of a small development branch, have currently not filed for bankruptcy. Wirecard Bank is currently not part of the bankruptcy proceedings, and Wirecard Bank’s payment transactions are not affected.

Payments to Wirecard Bank merchants would continue to be carried out without restrictions within Germany.

Visa and Mastercard, the two major credit card providers, announced on Friday that they would review their cooperation with Wirecard.

“Which customer wants to get involved with such a company?

The message from the board was apparently balm for the souls of the battered investors and Wirecard share shot up to over € 4.00 in the morning after closing at € 1.28 on Friday. The price jump does nothing to change the fundamental problem of a gigantic balance sheet forgery with freely invented sales and profits in the billions. The share also remains miles behind its price of June 18 at a good 100 Euros.

Investors should not be too happy too soon. British hedge fund manager Christopher Hohn sees no future for Wirecard. “As it now turns out, a significant part of the assets were not real, which in turn raises doubts about the substance of historical profits,” said Hohn in an interview with the “Handelsblatt”.

Wirecard was unable to provide the auditor KPMG with a list of end customers in third-party acquiring business for the period 2016 to 2018.

“Which customer wants to get involved with such a company?” Hohn said.

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Holvi Mastercard temporarily suspended due to Wirecard insolvency

Wolfgang Holzem

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Holvi Mastercard has been temporarily suspended due to recent events in connection with the insolvency of Wirecard AG

How did this happen?

The UK Financial Conduct Authority (FCA) has suspended service for Wirecard Card Solutions Ltd (WDCS) earlier today. WDCS is a subsidiary of Wirecard AG and issues the Holvi Business Mastercard. This decision was taken by the FCA without any prior notice.

What does this mean for you?

All other functions of your Holvi account are still fully available. You can still invoice, receive and transfer funds. Please be assured that all Holvi customer accounts and funds remain safe, secure and accessible at all times – no Holvi accounts have been impacted by this event. This is because all Holvi customer funds are segregated and held in separate accounts in European banks in Finland, Sweden, Denmark, the UK and France.

No customer funds are held by Wirecard AG. Your money and Holvi account are safe.

Your trust is our top priority. We’re actively working on a solution and will continue to update as soon as possible.

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Wirecard Board wants to continue Business in the UK and discussion are ongoing with the FCA

Wolfgang Holzem

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The payment processor struggling to survive a balance sheet scandal Wirecard, continues to do business despite the application for bankruptcy. “The board is of the opinion that a continuation is in the best interest of the creditors,” said the Dax group on Saturday in Aschheim near Munich.

The management board made an application for the opening of insolvency proceedings for Wirecard AG last Thursday.

According to the company, the examination of whether insolvency proceedings will be opened continues.

The business operations of the group companies including the licensed units are currently being continued, it said. It is constantly checked whether bankruptcy applications for subsidiaries of the Wirecard Group must also be made. Group companies, with the exception of a small development branch, have currently not filed for bankruptcy.

The Wirecard Bank is currently not part of the bankruptcy proceedings, the payment transactions of the Wirecard Bank are not affected, the company emphasized. Payments to Wirecard Bank merchants would continue to be carried out without restrictions. They are also “in constant communication with the credit card organizations”.

Wirecard Card Solutions has interrupted business

Wirecard Card Solutions Limited, based in Newcastle, “has interrupted its business due to an order from the responsible Financial Conduct Authority,” it said. However, Wirecard hopes to be able to continue operations in the UK with its current global B2B clients.

Current B2B clients include Payoneer, Hovi, Curve.

Measures for this are discussed currently with both the UK and German authorities.

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Deutsche Bank is considering taking over Wirecard Bank

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At the beginning of the week it still looked as if Wirecard’s Bank would also go into bankruptcy because too much customer money had meanwhile flowed out – now it is becoming clear that Deutsche Bank could take over in whole or in part. The Bank is examining possible financial aid in coordination with BaFin, the insolvency administrator of Wirecard AG and the management board of Wirecard Bank, a spokesman said.

According to German media reports, at least one financial investor has also expressed an interest in Wirecard Bank.

The financial supervisory authority Bafin had appointed the Bundesbank as a special representative at Wirecard Bank, who should ensure that no funds flow to Wirecard AG and that business continues.

Wirecard Bank has a full banking license and can offer all financial services. Since the beginning of the year, it has been promoting 0.75 percent interest on checking deposits on the “Boon Planet” banking app, while other institutes hardly pay any interest or even charge fees for fixed deposits.

If the bank had gone bankrupt, the deposit guarantee fund of the private banks would have compensated customers who did not withdraw their money on time.

On the balance sheet, Wirecard Bank is not a heavyweight. According to internal sources, at the end of March it had total assets of 1.6 billion euros, which roughly corresponds to a medium-sized savings bank. The equity at the end of the quarter was 205 million euros and he bottom line was a surplus of 4.7 million euros at the end of the quarter, after 40.8 million in the same quarter of the previous year.

What motives drive Deutsche Bank is still unclear. “We are one of the largest banks in the payment traffic worldwide and that is one of our strengths, a real core business area,” Deutsche Bank board member Fabrizio Campelli told Handelsblatt in an interview published on Friday and “if there are opportunities to strengthen ourselves, we will look at them.”

Deutsche Bank may be targeting Wirecard Bank’s corporate customers in payment transactions, although the first have already turned away. Since the beginning of July, for example, the discounter Aldi Süd has no longer processed credit card payments through the insolvent payment service provider, but through the provider Payone, as the company explained on Thursday. 

The cooperation with Wirecard Bank has since been limited to business with the Aldi gift card. But this has no consequences for customers.

The connections between Wirecard and Deutsche Bank are complex anyway. Last year, on the initiative of the Wirecard Group, there were even informal merger talks with Deutsche Bank, which, however, broke off quickly as Bloomberg news agency reported first. In addition, the bank temporarily granted company founder Markus Braun a private loan of EUR 150 million secured with Wirecard shares.

In addition, one of the auditors, who was responsible for checking the Wirecard balance sheet at EY in 2017, switched to Deutsche Bank in 2018 as chief accountant.

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