The bankruptcy of the payment provider Wirecard in Brussels raises questions about failures of the German financial supervision. The scandal is worrying for Merkel.
Frankfurt. Expensive for investors, embarrassing for the German financial market regulator Bafin: that the balance sheet scandal surrounding the payment service provider Wirecard, in which 1.9 billion euros suddenly vanished, went unnoticed for so long. After the company had to file for bankruptcy on Thursday, the EU Commission came on Friday.
According to its will, the European Securities and Markets Authority Esma should clarify whether German financial supervision failed to control Wirecard, said Vice-Commissioner Valdis Dombrovskis. He expected an answer from her by mid-July. “We have to clarify what went wrong,” he told the British “FT”, which has long reported inconsistencies at the German company.
Germany’s SPD finance minister Olaf Scholz already announced a reform of the Bafin and announced that it would examine its structures in order to find possible errors. The agency’s current working methods would also have to be reconsidered. “In future, the Bafin must be able to carry out special tests as quickly, efficiently and efficiently as possible,” said the SPD politician. The supervisor, Felix Hufeld, has already admitted mistakes in the Wirecard case. Next Wednesday, he will have to answer the Causa Prima.
Wirecard cannot get rid of DAX
Wirecard is the first DAX stock in history to have to file for bankruptcy. The stock lost over 98 percent of its value in seven trading days and now costs less than two euros. Nevertheless, the paper is expected to remain in the top German stock exchange league until early September. The set of rules does not provide for an earlier farewell or the stock being thrown out. Not so in the Stoxx-Europe-600, from which the paper flies on Tuesday.
Either way – the damage to the German stock market has been done. Even Chancellor Angela Merkel said through her government spokesman that the goal must now be to remedy the weaknesses in the financial market. She described the accounting scandal as worrying. The public prosecutor’s office in Munich is investigating the Wirecard case on suspicion of falsifying the balance sheet and market manipulation. The auditor EY also has to put up with allegations because he had tested the numbers of the fallen stock market star for years without hesitation. The German Association of Capital Investors (SdK) has already filed criminal charges against two current and one former manager of EY. There are doubts that EY is suitable as an auditor at all. The SdK announced that it would vote at future general meetings for the investors it represented against an appointment of EY as the auditor. At EY itself, the guilt is dismissed: At Wirecard, a sophisticated, global fraud system has been set up to dupe auditors and investors.
Customers are considering alternatives
Meanwhile, more and more customers, of whom there are more than 300,000, are moving away from Wirecard. Credit card providers Visa and Mastercard are rethinking their business relationships with the group, as the Bloomberg news agency reports. ÖBB is also a Wirecard customer. On request, they informed the “press” that the further cooperation with Wirecard was currently being “very intensively analyzed”, as well as possible alternative providers. (ag./nst)