German fintech to push Commerzbank out of DAX 30

FRANKFURT AM MAIN: Wirecard, a Bavarian start-up specialised in online payments, is set to nudge German giant Commerzbank out of the blue-chip DAX index yesterday, in the latest sign of plucky fintechs outshining traditional lenders.

Frankfurt stock exchange operator Deutsche Boerse plans to unveil the new composition of the DAX 30 index of leading German firms at 10pm ( 2000 GMT), as part of a regular review of listed companies’ market capitalisation and trading volumes.

Commerzbank is Germany’s second-largest lender and a founding member of the prestigious DAX club three decades ago.

But the ailing bank, which had to be rescued by the German state during the financial crisis, has seen its share price plunge by a third since January to give it a market cap of just over 10 billion euros ( US$11.5 billion) – the lowest of all DAX 30 players.

Investor darling Wirecard, currently listed on the TecDAX index, is widely expected to take Commerzbank’s spot in the reshuffle. The so- called ‘financial technology’ (fintech) company that makes software for cashless and contactless payments has seen its share price soar by 110 per cent this year.

It has a market cap of over 23 billion euros, surpassing even flagship lender Deutsche Bank which is valued at some 20.5 billion euros – and was itself axed from the eurozone’s benchmark Eurostoxx 50 index on Monday.

Wirecard is now the country’s third-largest financial group on the German stock market behind insurance behemoths Allianz and Munich Re.

Founded in a Munich suburb in 1999 at the height of the dot come bubble, Wirecard started out processing card payments for gambling and pornography websites.

Its rise has been fuelled by the boom in e- commerce and surging demand for online transactions as well as payments made just by holding a credit card or smartphone over a reader, technologies that have shaken up the financial sector and left old- school banks struggling to keep up.

Wirecard’s clients include duty free shops at airports, the Air France-KLM carrier, mobile phone operators O2 and Orange as well as travel firm TUI and supermarket chain Aldi.

In a sign of its global ambitions, Wirecard has clinched partnerships with Chinese mobile payment companies Alipay and WeChat Pay, hoping to cash in on the burgeoning market of using apps to pay for goods in real-world shops.

Wirecard CEO Markus Braun said only around two per cent of transactions around the world today are fully digital, with cash still accounting for the bulk of purchases.

“We want to make payments invisible,” Braun recently told the Frankfurt Allgemeine daily.

“We see this market growing 10fold, or even 30-fold in the future.” Wirecard, which has a German banking license, this year also started offering its own lines of credit to small- and medium-sized enterprises. — AFP