Here’s how Commerzbank, Ing and Abn Amro are shaking over the Wirecard scandal
15 credit institutions, among which Commerzbank, Ing and Abn Amro stand out, would be ready to take legal steps in the Wirecard scandal. The article by Emanuela Rossi
The sky above Berlin is always clouded for Wirecard and for the other companies involved in the bankruptcy of the German company. The latest news is that the 15 banking groups that lent 1.75 billion to the recently bankrupt company would be ready to take legal action. The credit institutions in question – among which Commerzbank, Ing and Abn Amro stand out, just to name the major ones – have the intention of bringing those who had to supervise to the dock. And he didn't.
THE COMMERZBANK AND OTHER ACCUSATIONS
WDR and Sueddeutsche Zeitung reveal what the 15 groups involved in the failure of Wirecard are planning . According to unofficial sources, they say, the counterparty would be the Federal Government of Germany, Bafin Banking Supervisor, the auditors of EY, formerly Ernst and Young, the supervisory board and the board of directors of Wirecard. In essence, each of these subjects would not have been able to carry out their surveillance role well.
WHAT HAPPENED TO WIRECARD
Wirecard Ag is a Munich-based financial and digital payment services company that offers technology that enables electronic payments and the issuance of credit cards such as PayPal and Western Union, its direct competitors. The group also includes the subsidiary Wirecard Bank AG, which is a member of the Visa, MasterCard and JCB payment circuits. An extensive description of Wirecard AG and what happened a few months ago comes from the European Parliament . Founded in 1999, the company has grown a lot in its 20 years of life thanks mainly to its expansion in Asia. In 2018, Wirecard Ag recorded a turnover of over 2 billion and a net profit of 347 million. The assets amounted to € 1.9 billion and had 5,154 employees. Again on 7 June, through a press release, the board of directors declared itself confident for 2020, expecting "profits before interest, taxes, depreciation and amortization (EBITDA) in a range between € 1.0 billion and 1, 12 billion euros ". It should be remembered that in September 2018 Wirecard joined the 30 companies that make up the Dax 30 index, replacing Commerzbank, the second largest German bank, driven by the trend in the share price that favors fintech business models. Meanwhile, the scandal has greatly destabilized the German stock exchange: Deutsche Boerse has changed its rules with the aim of quickly throwing Wirecard out of the Dax30. Wirecard – the first bankrupt company in the index in question – has been replaced by Delivery Hero, a food company.
In a hearing at the Bundestag, the BaFin revealed that a legislative loophole would have allowed Wirecard to obtain a license to create a bank, precisely the Wirecard Bank, and at the same time to escape from surveillance and banking rules, including the obligation to keep a capital reserve to cover any losses. According to the German Minister of Economy, Peter Altmaier, "it is an unprecedented scandal in the world of finance".
Already in 2018 and 2019 some Bavarian regional agencies seem to have feared his involvement in money laundering operations but there would have been no consequences. In recent weeks, however, what happened would have emerged : about 2 billion euros recorded among the balance sheet assets – or about a quarter of the entire company balance sheet – would not exist and would have been deposited on two banks in the Philippines which however deny any contact with Wirecard. True, however, the 3.5 billion in debt recorded in the balance sheet. According to the German investigators, the managers of the company have falsified the volumes of business with false revenues to attract investors and customers. “Some speak of a 'well-developed and refined fraud' – wrote Mario Lettieri and Paolo Raimondi on Startmag -. In Italy we would define the whole thing with much more precise terms, much more than a big scam. It is certain that all internal and external control and supervisory agencies have failed miserably. The audit was carried out by the well-known auditor, the private international agency Ernst & Young, which claims to have been 'deceived' ”. At the moment the 1.9 billion holes announced by former CEO Markus Braun – arrested at the end of June and then released on bail – have risen to 3.2 billion.
Meanwhile, the judicial news is enriched with disturbing news: in early August Christian B., former manager of the financial company for Asia, died in Manila for causes still to be clarified. He would have been the one to help the former president of Wirecard, Jan Marsalek, a fugitive since June, or since the scandal exploded. In early July, however, German police arrested another Wirecard manager, Oliver Bellenhaus, in Munich, accused of aggravated fraud and other crimes. Bellenhaus headed the Dubai-based division of Wirecard which, according to the Financial Times, accounted for 40 percent of the group's profits.
THE INVOLVEMENT OF ITALY
In Italy there are numerous investors who have believed in the potential of the fintech company. “After Germany, Italy is the country with the highest number of investors overwhelmed by the Wirecard crash of the nearly 400 that I represent to proceed by legal means and heal large and small losses, taken individually from 7 million to 500 euros. Austria follows, ”lawyer Michael Leipold told Sole 24 Ore .
THE WEIGHT OF THE WIRECARD SCANDAL ON THE MAJOR BANKS (COMMERZBANK, ING, LBBW AND ABN AMRO)
Among the credit institutions that suffer most and will suffer from past relations with Wirecard is Commerzbank, whose operating result , in the second quarter, fell to 205 million (it was 309 million in the same period of 2019). The second bank in Germany certainly has to deal with the crisis linked to the pandemic from Covid but also with the write-downs of the credits claimed against the German fintech: provisions for credit losses in the quarter rose to 469 million euros compared to 178 million euros last year. Of these, approximately 175 million concern the Wirecard alone. The bank for 2020 expects credit losses of between 1.3 and 1.5 billion euros, up from the previous guidance from 1 to 1.4 billion euros.
Ing, the largest bank in the Netherlands, also participated in the consortium of European banks that lent money to Wirecard, in fact he was one of its largest lenders and even in his case the losses reached 175 million. In the second quarter , profits fell 79% and quarterly net profit fell to 299 million compared to 1.4 billion in the same period last year due to write-downs Amsterdam-based lender set aside other 1.3 billion to meet expected future defaults after having already set aside 661 million in the first quarter.
Still the coronavirus and the bankruptcy of the Wirecard force the Landesbank Baden-Württemberg (LBBW) to have to redo the accounts . Earnings before taxes plummeted in the first half of the year by almost 69% to 103 million and provisions for risks rose to 281 million (the previous year they were 63 million). To weigh, as mentioned, the Wirecard debit and the provisions for possible insolvencies caused by the pandemic
Loss of 5 million in the second quarter of 2020 for ABN Amro due to a maximum write-down charge of 703 billion, mainly due to the Wirecard case where the Dutch bank had significant exposure. For these reasons, ABN Amro has announced that the corporate division will withdraw into the markets of north-western Europe and will therefore exit the United States, Asia, Australia and Brazil. The restructuring will affect 45% of the loans for a value of 18 billion.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/perche-commerzbank-ing-lbbw-e-abn-amro-tremano-per-lo-scandalo-wirecard/ on Wed, 23 Sep 2020 13:10:09 +0000.