Deutsche collaborates with regulators on rescue of Wirecard Bank

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Deutsche Bank is working with German regulators on a possible bailout of Wirecard Bank, the deposit group’s payment unit at the center of one of the country’s largest post-war accounting frauds.

Wirecard Bank, which at the end of 2019 had total assets of 1.9 billion euros, is based in a suburb of Munich and is not part of the insolvency proceedings of its parent group, which have been triggered last week when the company said cash was lacking and its business was most important. had been distorted.

Deutsche said it “is currently examining the possibility of providing financial support to Wirecard Bank AG”, adding that this would be in coordination with the German financial watchdog BaFin, the group administrator collapsed and the management of the unit ready.

“We are in principle ready to provide this support in the context of continued business operations, should such assistance become necessary,” said the largest German lender. He has not disclosed how much money he could provide or how a bailout could be structured.

Deutsche is in the midst of its own restructuring, which started a year ago and includes the loss of 18,000 jobs, as well as a sharp reduction in its investment banking activities.

The Frankfurt-based lender has not made a profit since 2014 and warned investors in April that its goal of reaching pre-tax balance this year has become more difficult due to the economic impact of Covid-19.

BaFin confirmed talks on the future of Wirecard Bank, adding that it welcomed “any kind of support” to the lender, who is part of the deposit insurance system of German private banks.

Wirecard’s administrator, Munich lawyer Michael Jaffé declined to comment. Jaffé said Tuesday that “many” companies have expressed interest in purchasing parts from Wirecard. Wirecard declined to comment.

Last week, BaFin sought to demarcate Wirecard Bank, the lender that the payments group has held for more than a decade and has held most of its licenses from credit card companies such as Visa and Mastercard.

The watchdog installed a special representative at the bank’s headquarters to monitor management decisions and imposed a partial payment ban to prevent the lender from transferring certain assets to Wirecard. At the end of 2019, Wirecard Bank announced a healthy 21% equity ratio of common shares to assets.

After lender owner Wirecard AG collapsed in insolvency last Thursday, BaFin plans to freeze bank assets but concluded that the lender’s situation was not bad enough to justify such a decision, said to the Financial Times someone with direct knowledge of the matter. .

Deutsche has a history of bailing out struggling German rivals. Over the past decade, it has acquired Postbank and Sal. Oppenheim, two lenders who had existential troubles and who then caused Deutsche a lot of headaches.

Bloomberg first announced Deutsche’s desire to provide financial support to Wirecard Bank.

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