Shortly before the first meeting of the creditors of the wirecard scandal group, the spanish merchant bank santander buys the core business of the insolvent payment processor.
The spaniards take over the technology and business operations, the 500 or so remaining employees can also transfer. This was announced by insolvency administrator michael jaffe and santander late on monday evening. This wednesday, jaffe will report on the situation of the former dax company, which collapsed after a fraud scandal and is heavily in debt, at the first creditor meeting in munich.
Barely three months after the formal opening of insolvency proceedings, the spaniards are taking over the wirecard technology platform for payment services, the assets required for this and the personnel. The majority of the remaining wirecard employees and the platform are to become part of santander’s merchant service team, but will be able to remain in their current jobs. The purchase price is said to be more than 100 million euros. Several media reported on this. However, jaffe and santander have agreed not to disclose any information. The deal is expected to be finalized by the end of the year.
The wirecard companies will not be taken over by the spainans – this will save santander both their debts and legal risks. The main companies involved are the parent company wirecard AG, the subsidiaries wirecard technologies and wirecard acquiring and issuing, and wirecard bank. The bank is to be wound up step by step in close coordination with the financial supervisory authority bafin.
Jaffe had already sold the former wirecard subsidiary in the USA and other companies in brazil and romania; according to information from financial circles, the total proceeds so far amount to half a billion euros. These proceeds benefit creditors. According to the insolvency administrator, further sales are planned in asia, south africa and turkey.
However, it is highly unlikely that jaffe will be able to pay off the mountain of debt left behind by former CEO markus braun, who is in custody, and his suspected accomplices. According to calculations by the munich public prosecutor’s office, banks and investors are believed to have lost more than three billion euros. The presentation by the insolvency administrator at the creditor meeting in munich’s lowenbraukeller is eagerly awaited. So far, it is unknown how high the creditor claims are. It is also unknown how much of the lost billions can possibly be salvaged.
Braun and co. Wirecard’s balance sheet is said to have been inflated over the years with phantom transactions in the middle east and southeast asia in order to obtain loans from banks and investors in this way. Munich public prosecutor accuses accused managers such as fugitive ex-chief financial officer jan marsalek of professional gang fraud.
In addition to the three billion euros lost mentioned by the investigators, there are the immense losses in the price of the wirecard share. In september 2018, the company was worth more than 23 billion euros on the frankfurt stock exchange; it is currently worth less than 100 million euros. Braun is to testify as a witness before the bundestag’s wirecard investigation committee this week.
The austrian manager is on the one hand a prime suspect accused by the public prosecutor’s office, and on the other hand has himself suffered immense losses: two years ago, braun was still a billionaire thanks to his shareholding – which has since been sold off in large part. In the meantime only a fraction of that is left. And in all likelihood the manager will have nothing left of this either, as braun is facing numerous lawsuits and claims for damages.
The main business of wirecard and other payment processors is the processing of card payments in retail and on the internet. Payment service providers sit at the interface between banks and credit card companies on the one hand and the associated merchants on the other.
When a customer pays with their card, the service provider first transfers the amount to the merchant’s account before collecting the money from the bank or credit card company that issued the card. The service providers earn their money with commission fees.
Competition is tough, apart from the invented overseas businesses, wirecard apparently wrote years of losses. But with electronic payment growing steadily, santander is looking to expand in this business.