Munich-based Wirecard was once seen as one of Europe’s rare tech success stories.
Photo: jens schlueter/ShutterstockThe more than $2 billion that banks were supposedly holding on behalf of Wirecard AG probably doesn’t exist, the German financial-technology company said.
Wirecard Chief Executive Markus Braun abruptly resigned Friday after two Philippine banks thought to be holding the funds said they had never had it.
The share price of the Munich-based company—once seen as one of Europe’s rare tech success stories—has fallen more than 75% in two days, erasing in excess of $10 billion in market capitalization.
Wirecard said early Monday that upon further examination, its management board now believes there is “a prevailing likelihood that the bank trust account balances in the amount of €1.9 billion ($2.1 billion) do not exist.”
The company has withdrawn its results for 2019 and the first quarter of 2020, as well as its financial forecasts.
Wirecard said it is having “constructive discussions” with its lenders about its credit lines and borrowings due at the end of June. It is also assessing financing options with investment bankers from restructuring specialist Houlihan Lokey.
The company is considering cost cuts and the “restructuring, disposal or termination of business units and products segments.” Wirecard added that its information-technology systems are operating normally.
Wirecard runs vital but little-noticed technology that connects online merchants, consumers and the banking system. It has long attracted attention from hedge funds that have questioned its accounting, and some of those funds profited last week from Wirecard’s plunge.
Write to Quentin Webb at quentin.webb@wsj.com
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