Wirecard shares continue to nosedive as boss claims it is victim of ‘considerable fraud’
Shares in Wirecard continued to plummet today as its chief executive said it may be the victim of “considerable fraud” after auditors yesterday found a cash hole of almost €2bn in the company’s financial accounts.
In-house auditor EY yesterday refused to sign off the German payments firm’s annual accounts, saying it could not confirm the existence of €1.9bn (£1.7bn) in cash in trust accounts — the equivalent to a quarter of Wirecard’s balance sheet.
Shares deepened yesterday’s losses of 62 per cent, sliding a further 43 per cent today to €22.75 at 10.30am. The company opened trading on the Dax at €100.80 per share yesterday, meaning the stock’s losses have now hit 71 per cent since Wednesday’s close.
Markus Braun, Wirecard chief executive, said: “At present it cannot be ruled out that Wirecard AG has become the aggrieved party in a case of fraud of considerable proportions.”
He said two banks with an investment grade rating from Moody’s and S&P had taken over the management of the trust accounts in 2019.
“It is currently unclear why the two banks have stated to the auditor that the confirmations are spurious. The trustee has announced to Wirecard AG that he will clarify the facts of the matter with the two banks managing the trust accounts at short notice,” Braun said in a video statement.
The two Philippines banks that supposedly hold the missing cash today denied any business relationship with the German fintech. BDO Unibank, the Philippines’ largest bank by assets, and the Bank of the Philippine Islands, today issued statements saying Wirecard was not a client.
“Wirecard is not a client of the bank. The document claiming the existence of a Wirecard account with BDO is a falsified document and carries forged signatures of bank officers,” BDO Unibank chief executive Nestor Tan said in a statement. “Wirecard is not even a depositor — we have no relationship with them”.
The Bank of the Philippines said in a separate statement that it would investigate the issue and that Wirecard was not a client of the Manila-based bank.
The German fintech will face the possibility of having to repay €2bn in bank loans if its results are not signed off by the end of the day today.
“Having questions being asked about the reliability of your accounts is bad enough, but to make matters worse, if the group doesn’t publish its 2019 results by [today] it runs the risk of being in breach of covenants,” said David Madden, market analyst at CMC Markets. “Credit lines can be tricky to achieve when your company is in good health, let alone when some people don’t believe your figures.”
The revelations mark a sharp U-turn in fortune for the payments firm, which has repeatedly rebuffed claims of a bloated valuation.
Wirecard registered a market value of €24bn at its launch on Germany’s Dax 30 just two years ago, but today’s share price plunge means the fintech is now valued at little over €2.28bn.
Short sellers, who have piled bets against the payments firm in recent months amid mounting claims of Wirecard’s financial inaccuracy, hit the jackpot yesterday following the company’s announcement of a €1.9bn accounting black hole.
One German-based trader cashed in €750,000 in the half-hour of the announcement, Reuters reported, adding that he had “just made a fortune”.