FT News Briefing Wirecard insolvency, Brussels to probe German regulator, Federal Reserve bans buybacks
Jun 26, 2020
Wirecard's shocking insolvency exposes a massive fraud, leaving nearly 2 billion euros missing and prompting a high-profile arrest. Investigations into the German financial oversight reveal significant lapses in regulation. Meanwhile, the Federal Reserve takes action to strengthen U.S. banks amid the pandemic by capping dividends and banning buybacks, reflecting growing concerns about financial stability. The implications of these events unfold against the backdrop of economic uncertainty.
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Wirecard's Downfall
- Wirecard's insolvency marks the first for a DAX member in over 30 years.
- The company's missing €2 billion likely doesn't exist, leading to the arrest of former CEO Marcus Braun.
Wirecard's Business Model
- Wirecard's business model involved a legitimate, low-profit banking arm and outsourced tech payment processing.
- The outsourced businesses, based in the Philippines, Dubai, and Singapore, are where the alleged fraud occurred.
Suspicious Offices
- The supposed headquarters of Wirecard's Philippine payment business shared an office with a tour bus company.
- The Dubai office had few staff and handled billions in transactions, raising suspicion.