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Wirecard as a whole does not hold a banking license, only their banking subsidiary does. They were actually properly regulated by the BaFin, but everything else

Wirecard as a whole does not hold a banking license, only their banking subsidiary does. They were actually properly regulated by the BaFin, but everything else had much more loose oversight.

calpaterson 6y ago
They were absolutely not properly regulated by BaFin. For starters the bank released false accounts to the public - as Wirecard Bank is 100% owned by Wirecard it's accounts aren't broken down from the (fraudulent) Wirecard accounts under the rules for consolidated subsidiaries. I think this is a big problem for a regulated financial institution. Secondly, Marcus Braun (Wirecard Chief Exec) managed to take an unauthorised director's loan from Wirecard Bank equivalent to 1/5 of the banks equity capital. He eventually relented and repaid the money but not BaFin does not seem to have gotten involved. Surely this should have at least rung alarm bells!! Apparently not, BaFin continued to sleep on the matter. Finally, Wirecard bank has now collapsed in a disorderly fashion with depositors unable to access their deposits for a period, foreign regulators freezing funds to defend depositors, etc. Wirecard Bank is a very small bank. If BaFin is fluffing it up this badly on the easy cases, what is going to happen when a big bank goes bust? There were rumours in 2017 that Deutsche was going to go insolvent - how much confidence to you have that BaFin would manage that process well? Or would we find also that 50% of their balance sheet does not exist?
wjnc 6y ago
In my experience this is a truism. Licenses almost never are held by the "top" legal entity in a firm, but fall to subsidiaries. The thing is that oversight not always carries over the boundaries of legal entities. Perhaps dividend arrangement do, but if other parts of the firm are in (regulatory) different markets it often ends the oversight of the regulator.

Wirecard as a whole does not hold a banking license, only their banking subsidiary does. They were actually properly regulated by the BaFin, but everything else had much more loose oversight.

calpaterson 6y ago

They were absolutely not properly regulated by BaFin. For starters the bank released false accounts to the public - as Wirecard Bank is 100% owned by Wirecard it's accounts aren't broken down from the (fraudulent) Wirecard accounts under the rules for consolidated subsidiaries. I think this is a big problem for a regulated financial institution. Secondly, Marcus Braun (Wirecard Chief Exec) managed to take an unauthorised director's loan from Wirecard Bank equivalent to 1/5 of the banks equity capital. He eventually relented and repaid the money but not BaFin does not seem to have gotten involved. Surely this should have at least rung alarm bells!! Apparently not, BaFin continued to sleep on the matter. Finally, Wirecard bank has now collapsed in a disorderly fashion with depositors unable to access their deposits for a period, foreign regulators freezing funds to defend depositors, etc. Wirecard Bank is a very small bank. If BaFin is fluffing it up this badly on the easy cases, what is going to happen when a big bank goes bust? There were rumours in 2017 that Deutsche was going to go insolvent - how much confidence to you have that BaFin would manage that process well? Or would we find also that 50% of their balance sheet does not exist?

wjnc 6y ago

In my experience this is a truism. Licenses almost never are held by the "top" legal entity in a firm, but fall to subsidiaries. The thing is that oversight not always carries over the boundaries of legal entities. Perhaps dividend arrangement do, but if other parts of the firm are in (regulatory) different markets it often ends the oversight of the regulator.