Wirecard North America officials said the company was looking for a new owner as the multi-billion accounting scandal at the German-based payments firm reverberated across the globe. UK regulators reached agreement to let operations resume there.
Wirecard North America Inc. said that it is seeking new ownership amid the massive accounting scandal surrounding Germany’s Wirecard AG, and said an investment bank is coordinating the sale, while regulators in the U.K. have allowed Wirecard to resume operations in that market.
Wirecard AG has been under a regulatory microscope in recent weeks after more than $2.1 billion went missing and the payments giant was forced to delay financial statements. The company fired CEO Markus Braun who was later arrested by Munich authorities.
Wirecard North America formerly operated as the Citi Prepaid Card Services business until it was sold to Wirecard AG in 2016. Wirecard North America said in a company release that it is a “self-sustaining entity that is substantially autonomous” from Wirecard AG.
“Wirecard North America continues to operate without any disruption to clients and cardholders,” Seth Brennan, managing director at Wirecard North America, said in a company release. “The strong, independent cash flow and financial position of Wirecard North America allow us to operate the business on a completely standalone basis.”
Wirecard said that cardholder and client funds are being held at well capitalized and independent banks in the U.S. and Canada, including Sunrise Banks, Fifth Third Bank and People’s Trust Co.
Meanwhile in the U.K., the Financial Conduct Authority said today that it lifted the freeze it placed on Wirecard’s U.K. operations. Customers of several fintechs, including Curve, Anna Money and Pockit, were temporarily unable to access funds due to the suspension.
“The Wirecard situation is interesting as it exposes how reliant some challenger banks and fintech services are on other fintechs, meaning that if fintechs encounter difficulties this will have knock on effects throughout the ecosystem,” said Nick Maynard, lead analyst at Juniper Research in the U.K. “However this will not have a huge impact going forward.”
“Prior to the fraud, executives generally have pressures to meet capital market expectations and small problems lead the executives to push out into the gray zone,” Bradon Gipper, assistant professor of accounting at Stanford Graduate School of Business, told Mobile Payments Today via email.
Maynard said the Wirecard problem is more of a corporate governance and mismanagement problem rather than an industry wide indicator of the fintech industry as a whole.
i2C Inc., a Redwood City, California-based provider of digital payment and open banking technology, said that it stood ready to assist clients of Wirecard or any other insolvent bank or processor that has been negatively impacted of late.
The company said that it would be able to help Wirecard clients secure new bank sponsors and support a smooth and rapid transition of credit, debit and prepaid card issuer programs to minimize customer disruption.