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Deutsche Bank mulls a rescue for Germany's Wirecard Bank

Jill Petzinger
·Germany Correspondent, Yahoo Finance UK
·2-min read
ASCHHEIM, GERMANY - JULY 01: Media gathers outside the corporate headquarters of payments processor Wirecard during a raid by investigators on July 1, 2020 in Aschheim, Germany. According to media reports state investigators are searching Wirecard offices as well as the residence in Vienna of Wirecard CEO Markus Braun. The company recently declared bankruptcy and its executives are being investigated for fraud. (Photo by Lennart Preiss/Getty Images)
ASCHHEIM, GERMANY Media gathers outside the corporate headquarters of payments processor Wirecard during a raid by investigators on July 1, 2020. Photo: Lennart Preiss/Getty Images

Germany’s disgraced Wirecard (WDI.DE) payments company, which filed for insolvency last week after revelations of a €1.9bn (£1.7bn, $2.1bn) hole in its balance sheet, could be thrown a lifeline from Deutsche Bank (DB).

Deutsche Bank said this week that it could envisage helping out Wirecard’s banking subsidiary with emergency financing to help it survive.

“We are, in principle, prepared to provide this support if such assistance should become necessary,” Deutsche Bank spokesman Sebastian Krämer-Bach said.

The German lender said that a potential offer was under discussion with Germany’s financial regulator, BaFin, the insolvency administrators, and the management of Wirecard Bank. The former chief executive of Wirecard Markus Braun is currently out on bail.

In an interview with Handelsblatt, published on Friday, Deutsche Bank’s chief transformation officer and management board member Fabrizio Campelli said that Wirecard’s bankruptcy could prove to be an opportunity for Deutsche.

“We are one of the largest banks in payment transactions worldwide. That is one of our strengths, a real core business,” Campelli told Handelsblatt. “So if there are opportunities to strengthen ourselves here, we will look at them.”

“With a view to Wirecard… it is about firstly examining whether it makes sense to support the Wirecard Bank financially,” Campelli added. “In principle, we can imagine that, but it must also be in the interests of Deutsche Bank and our shareholders.”

Assets of the DAX-listed fintech are currently being broken apart by its insolvency administrator — Wirecard Bank is not part of the insolvency proceedings — and attracting interest from global investors.

“A large number of investors from all over the world have already contacted us, who are interested in acquiring the core business or the independent business units that operate successfully on the market,” Michael Jaffe, the insolvency lawyer said in a statement to Bloomberg.

The company’s share price, which collapsed when the news of the scandal broke, surged after it declared bankruptcy last week, and are up over 7% as of Friday.

Regulator BaFin is still very much in the hot seat for lack of oversight on Wirecard. BaFin boss Felix Hufeld called the scandal “a complete disaster,” and finance minister Olaf Scholz has called for an overhaul of the financial watchdog’s systems.

READ MORE: Germany’s financial regulator in spotlight over Wirecard scandal

Wirecard hit the headlines in mid-June when auditor EY said it had refused to sign off on the company’s 2019 accounts due to the €1.9bn missing from the balance sheets.

Initially, Wirecard said that the money had disappeared from escrow accounts in the Philippines, and that it may have been the victim of “considerable fraud.” Then it admitted there was “a prevailing likelihood” that the funds did not exist in the first place.