Wirecard seeks to offload parts of its business to brace for an imminent cash crunch

In a statement on Monday, Wirecard (ETR: WDI) acknowledged the likelihood that the £1.7 billion that it is currently missing from its accounts may have never existed. Forecasting an imminent cash crunch, the payments firm also highlighted that it is now seeking to offload a few parts of its business to shore up finances. According to Wirecard:

“The Management Board of Wirecard assesses that there is a prevailing likelihood that the bank trust account balances in the amount of £1.7 billion do not exist.”

Wirecard’s missing money never entered Philippines

The news came after the Central Bank of the Philippines confirmed over the weekend that Wirecard’s missing money never entered the country. The financial services provider had previously presented documents that claimed it to be a client of two Philippines banks, BPI and BDO; both of which alleged the firm of forging documents last week.

Governor of the Bangko Sentral ng Pilipinas, Benjamin Diokno, highlighted on Monday that the central bank is conducting its own investigation into the matter. BPI also revealed to have suspended its assistant manager on Saturday whose signature appeared on the forged document. BDO, on the other hand, informed the central bank that one of its marketing officers is suspected of fabricating a bank certificate.

The stock opened around 40% down on Monday. Shares of the company have seen an unparalleled 85% decline since last week as its in-house auditor, Ernst & Young, refused to approve its 2019 accounts due to the missing money. The German company has lost more than £10 billion of its market value since last week and now has a market capitalisation at £1.89 billion.  

Wirecard withdraws 2019 financial statements

The fintech company announced to have withdrawn its 2019 financial statements on Monday. Owing to the scandal, Moody’s Analytics downgraded Wirecard’s rating to “junk” last week as its Chief Executive Officer, Markus Braun, resigned from the company on Friday. The German payments processor named James Freis as an interim CEO to replace Braun.

Wirecard is now scrambling to strike a deal with its creditors and hired the U.S. investment bank, Houlihan Lokey on Friday to devise a new financial strategy for the company.

Referring to the scandal, lawmaker Fabio De Masi of the German federal parliament said that it reflects the failure of Bafin in serving its role as a financial watchdog, and that the incident is likely to hurt Germany’s reputation in fintech.