The troubles afflicting Wirecard AG are not restricted to the German payment processing company. Some European lenders say they be prepared to recover as little as 20 % from the nearly $2 billion they're owed, sources told The Wall Street Journal.
As the one-time darling of Europe's financial technology (FinTech) community faces insolvency with the debt of nearly $4 billion, some lenders said there aren't many buyers willing to pay cents or euros on the debt.
Once a $28 billion FinTech leader, Wirecard has reported debt of nearly $4 billion after it says $2.1 billion went missing from two Philippines banks.
Wirecard's debt includes 1.75 billion euros ($2 billion) in revolving credit from 15 lenders.
For example, The Journal reported that Lloyds Banking Group PLC's dent of 120 million ($137 million) was sold around 18 cents on the euro to distressed debt hedge funds. A second unnamed bank attempted to sell its loan of 200 million euros ($229 million), but the sale fell through, the report said.
The WSJ report comes just days following the paper uncovered that Wirecard may have misled the financial community about its partnerships with blue-chip companies. While Wirecard touted handles SAP SE, Zurich Insurance Group and SoftBank Group Corp., the paper found that some of the people partnership announcements were misleading.
The Federal Financial Supervisory Authority, or BaFin, Germany's market watchdog, has faced criticism over the regulator's reported failure to research warnings about Wirecard. Among those sounding the alarm about Wirecard's potential fraud and cash laundering activity have been investors, U.S. law enforcement authorities, journalists and others.
But BaFin didn't make any move on those warnings, instead playing them down for a long time. The regulator handed the ball with other authorities, and perhaps, delay investigating the business's accounts, based on documents seen by The Journal. BaFin saw former Wirecard CEO Markus Braun as more trustworthy than his critics because of his large amount of shares within the company.
On Thursday (July 16), an executive in the Wirecard scandal reportedly admitted guilt to the multi-billion-dollar fraud and cash laundering case. The chief was the CEO of CardSystems Middle East, the biggest unit under Wirecard's command. Nicolas Fruehsorger, a defense lawyer for that executive, said his client \”has voluntarily given himself up for that proceedings and – in contrast to others – takes individual responsibility,\” based on Reuters.
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