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
Founded in 1999 and headquartered in Munich, Germany, wirecard was once considered one of the most promising technology companies in Europe. It processes payments for consumers and businesses, and provides data analysis services. The company has nearly 6000 employees in 26 countries, with revenues of more than 2 billion euros (about 2.2 billion US dollars) in 2018 and a market value of 24 billion euros.
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.
The companys management committee is assessing the possibility that the missing 1.9 billion euro cash balance marked by Ernst & Youngs auditors does not exist at all, wirecard said in a statement on Monday
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.
CEO leaves, credit rating is junk
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
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.
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.
Philippines refuses to carry the pot
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.
In addition, there were earlier documents showing that wirecard had deposited money into BDO and BPI accounts, but both banks said the documents were false.
The German monetary authority once banned short selling
In fact, wirecards business operations have been questioned since 2015. In January 2019, the financial times disclosed that wirecard was suspected of using forged and dated contracts in its Singapore office to inflate revenue figures. According to the report, wirecard uses the round tripping method to create suspicious transactions through multiple transnational units, making these transactions legitimate in the eyes of local auditors.
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.
In February 2019, the German federal financial regulatory authority said on its official website that before April 18 of that year, global investors would be immediately banned from establishing new short positions or increasing existing short positions on wirecard, which is the first time that Germany has banned short selling of a single stock.
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 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.
The wirecard scandal was a complete disaster and a disgrace - the German market should be dominated by quality and reliability.. But he defended a two-month ban on short selling imposed by regulators last year.
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
Munich police said a criminal investigation had been launched into wirecard. The Munich prosecutors office declined to comment.