Wirecard banks on hook for Us$1.8bil loan after firm unravels

FRANKFURT: Wirecard AG’S main banks are facing potential losses of about 1.6 billion euros (Us$1.8bil) on loans to the scandal-hit fintech after it started insolvency proceedings.

A group of about 15 banks led by ABN Amro Bank NV, Commerzbank AG and ING Groep NV had been negotiating next steps with the firm on a 1.75 billion-euro facility that was about 90% drawn, people with knowledge of the matter said earlier this week.

Talks on next steps with lenders came to an abrupt halt with the insolvency filing that surprised some of the banks, people with knowledge of the matter said.

Wirecard’s decision to file for insolvency caps the swift downfall of the financial firm once lauded as one of Germany’s most successful up and coming businesses.

The bank’s descent quickened earlier this week when it said that 1.9 billion euros (Us$2.15bil) previously reported as cash on its balance sheet probably doesn’t exist, triggering a collapse in the shares and a criminal investigation.

Ex-chief executive officer Markus Braun surrendered to police after an arrest warrant was issued. He’s since posted bail and is no longer in custody.

The banks didn’t terminate the loan and didn’t precipitate the insolvency, people familiar with the matter said.

Lenders had granted Wirecard a short reprieve, deciding not to force the firm to repay the loans right away while assessing the company’s long-term prospects, Bloomberg has reported.

Wirecard also has an outstanding bond worth 500 million euros and a convertible bond worth 900 million euros. —