Media: BaFin ignored warnings from a major bank about Wirecard manipulations

One of Germany’s largest and oldest banks, Commerzbank, warned BaFin as early as the start of 2020 about manipulations by the now-bankrupt fintech Wirecard, but the regulator did not take any action. The Financial Times reports, citing sources familiar with the situation.

Commerzbank financed Wirecard’s deals to acquire two Indian fintech companies. After FT’s series of articles about the manipulation of their partner’s accounts, Commerzbank, Deutsche Bank and other banks initiated an internal investigation in March 2019.

Its findings forced Commerzbank to distance itself from the partner by the end of 2019. In a detailed report published in January 2020, the bank notified BaFin of its role in the above-mentioned deals, as well as of suspicious transactions by Wirecard Bank’s clients. However the regulator concluded there were no immediate grounds for enforcement action, as it already had most of the information.

Skepticism of BaFin is also linked to the fact that at that time Commerzbank had not exited the banking consortium providing Wirecard with a revolving credit line of €1.75 billion. Bank representatives explained that they could not terminate financing under the contract terms.

Now former Commerzbank chief executive Martin Zielke and Deutsche Bank chief executive Christian Sewing are set to testify in the fintech’s case.

In June 2020, a hole of almost €2 billion was discovered in Wirecard’s balance sheet. The company later began bankruptcy proceedings.

The police arrested former Wirecard chief executive Markus Braun. Former top Wirecard executive Jan Marsalek is reported to have fled to Russia. The German Federal Prosecutor’s Office said cooperation between Marsalek and Austria’s state security service of Austria.

In late July, Wirecard investors filed a lawsuit against BaFin, accusing the regulator of taking measures against the company too late.

In December, the insolvency administrator Michael Jaffé filed a court action seeking to declare the company’s 2017 and 2018 financial statements invalid.

How Wirecard collapsed: dubious clients, fake reports and a hole of €2 billion

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