Thats another 44% drop in wirecards share price on Monday. As a result, wirecards share price fell 61.8%, 35% and 44% in three consecutive trading days, with a cumulative decline of 85.7%,
11.1 billion euros (about 88 billion yuan) of market value evaporated.
1.9 billion euros missing
Wirecard official website screenshot
There is no doubt that wirecard is seen as the success of fintech in Germany and was included in the German blue chip DAX index in 2018.
But on Thursday, local time, a wirecard announcement put the company in a desperate position. In the announcement, wirecard said it learned from Ernst & young, an audit firm, that EUR 1.9 billion in the companys trust accounts lacked sufficient audit evidence to be included in the consolidated financial statements. The company said doubtful funds accounted for nearly a quarter of the total consolidated balance sheet.
At the same time, the company said that there were signs that the trustee provided false balance confirmation to the auditor to deceive the auditor and create a false perception of such cash balance. At present, the companys management is working with ey to clarify this situation.
In recent years, Ernst & Young has regularly approved wirecards accounts, but has refused to sign 2019 accounts, confirming a survey released by KPMG in April. At the time, KPMG questioned the authenticity of wirecards profits.
At the same time, wirecard withdrew its initial unaudited results for 2019 and the first quarter of 2020, which were released earlier this year. The potential impact on the financial accounts of previous years cannot be excluded, the group said.
Wirecard said a constructive discussion with a banking consortium on a 2 billion euro loan to it continued. The loans can be terminated after the company missed the June 19 deadline for the release of audited annual results.
The company said it was considering cost cutting, disposal of business units and products, and restructuring measures to ensure business operations can continue..
As a result, Markus Braun, CEO of wirecard, who has been at the helm for 18 years, left on Friday to be replaced by James Freis, a former compliance officer at the German Stock Exchange.
New CEO of wirecard James Frith
In leaving, Braun hinted that wirecard itself could be the victim of fraud.
Wirecard cannot be ruled out as a victim of massive fraud, he said in a video statement released before his resignation
Braun also said he chose to leave because he didnt want to burden wirecard. The confidence in the capital market has been shaken for the company I have managed for 18 years, he said. In my decision, I respect the fact that the CEO is responsible for all business transactions.
At the same time, Moodys, the rating agency, has sharply downgraded wirecards credit rating to junk.. For wirecard, which is deeply involved in the cash audit scandal, the move is undoubtedly worse.
Moodys also said it could further downgrade the company in the future. Moodys pointed out that repeatedly delaying the release of annual performance reports could trigger a default event, leading to the urgent need for wirecard to refinance.
It is worth noting that around the 1.9 billion euro on wirecards books, the focus is mainly on two Philippine banks. Wirecard said last week that two Asian banks could not find accounts to deposit the cash, but did not identify the two banks.
According to Reuters, Philippine central bank governor Benjamin diokeno said in a statement on the 21st that preliminary investigation showed that the missing funds of wirecard did not flow into the Philippine market, and the Philippine financial bank and the Philippine archipelago Bank (BPI) involved in the incident did not suffer any losses.
Diogenes said the two largest banks in the Philippines were used in the international financial scandal to try to cover up the crimes of lawbreakers. The Philippine central bank is investigating the incident.
Diogenes also said that BDO and BPI have shown that wirecard is not their customer and they do not have any business with wirecard.
Short sellers make 18.5 billion in two days
The German monetary authority once banned short selling
In the face of the above allegations, the relevant head of wirecard has repeatedly denied that the allegations are collusion between the media and short sellers. Wirecards denial was backed by German officials.
According to the German monetary authority, the ban on short selling is due to the economic importance of wirecard, whose share price slump poses a serious threat to market confidence. If short selling is not restricted, there is a risk of further downward spiral in wirecards share price.
John Hempton, founder of Bronte capital, an Australian hedge fund, said they had been shorting the stock for 10 years. During that time, he watched wirecards share price rise from less than 7 euros to 200 euros at its peak in 2018.
Short sellers have made $2.6 billion (18.5 billion yuan) from the stocks collapse in the past two trading days, according to financial analysis firm s3partners.
The wirecard scandal is a complete disaster and a disgrace
The scandal embarrassed German financial regulators because of their endorsement of wirecard.
The company, once seen as the future of Germanys financial sector, has become a symbol of national embarrassment. Bloomberg described wirecards current situation and its close relationship with the German government.
For Germany, says Felix hufeld, head of the federal financial supervision agency,
In terms of the overall stock culture and corporate governance in Germany, this is clearly a serious problem that will affect all of us, Christian sewing, chief executive of Deutsche Bank, said at the Frankfurt financial summit But Olaf Scholz, Germanys finance minister, rejected calls for more regulation in the wirecard case. Regulators worked very hard and did their work, and we saw that today, Mr Scholz said in a video interview at the summit. Munich police said a criminal investigation had been launched into wirecard. The Munich prosecutors office declined to comment. Source: responsible editor of daily economic news: Wang Xiaowu_ NF
In terms of the overall stock culture and corporate governance in Germany, this is clearly a serious problem that will affect all of us, Christian sewing, chief executive of Deutsche Bank, said at the Frankfurt financial summit
But Olaf Scholz, Germanys finance minister, rejected calls for more regulation in the wirecard case. Regulators worked very hard and did their work, and we saw that today, Mr Scholz said in a video interview at the summit.
Munich police said a criminal investigation had been launched into wirecard. The Munich prosecutors office declined to comment.