Wirecard AG shares continued their free-fall after the two Asian banks that were supposed to be holding €1.9 billion ($2.1 billion) of missing cash denied any business relationship with the German payments company.
Wirecard now faces a potential cash crunch. The company warned Thursday that loans up to €2 billion could be terminated if its audited annual report was not published on Friday. Analysts at Morgan Stanley estimated that Wirecard has available cash of around 220 million euros, if it cannot locate the missing $2.1 billion.
“It was a rogue employee who falsified documents and forged the signatures of our officers,” BDO Unibank Chief Executive Officer Nestor Tan said in a mobile phone message. “Wirecard is not even a depositor — we have no relationship with them”.
The Bank of the Philippine Islands said in a separate statement that Wirecard isn’t a client and it continues to investigate the issue.
Wirecard shares plunged 24% at 9:11 a.m. in Frankfurt on Friday, taking the stock’s losses to 71% since Wednesday’s close. The company that was worth 24.6 billion euros in September 2018 when it entered Germany’s Dax index is currently valued at about 3.4 billion euros.
The denials from BDO and BPI follow a statement on Thursday from Wirecard, which claimed that auditor Ernst & Young couldn’t confirm the location of the missing cash that was supposed to be held in Asian banks and reported that “spurious balance confirmations” had been provided.
BDO has reported the Wirecard issue to Bangko Sentral ng Pilipinas, the Philippines central bank, Tan said.
The crisis has engulfed Wirecard in recent days. The payments company suffered one of the worst stock slumps in the history of Germany’s benchmark index after warning that as much as 2 billion euros in loans could be called due if its audited annual report, delayed for the fourth time, was not published by June 19.
Wirecard spokespeople did not immediately return calls and emails for comment.
Wirecard Chief Executive Officer Markus Braun has painted the company as a potential victim. The CEO has been resisting calls to resign and aggressively defending the company against accusations of accounting fraud, led by a series of articles in the Financial Times.
“It cannot be ruled out that Wirecard has been the victim in a substantial case of fraud,” Braun said in a statement published overnight.
The company temporarily suspended its outgoing Chief Operating Officer Jan Marsalek, it said in a statement late Thursday. Marsalek — who has been suspended on a revocable basis until June 30 — had tried to get in touch with the two Asian banks and trustees over the past two days to recover the missing money, but wasn’t successful, a person familiar with the matter said Thursday. It’s unclear if the funds can be recovered, the person added.
“Given the magnitude of the cash balances in question, new creditor risks and severity of the share price drop, we believe these board changes are unlikely to be enough to restore market confidence in the near-term,” said Robert Lamb, analyst at Citigroup, in a note Friday.
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