Wirecard, which is trying to sell pieces of its embattled company while rivals pick up its clients, has struck a deal to sell its U.K. division, Wirecard Card Solutions, to Railsbank, an open banking and payments technology firm.
Railsbank will obtain WCS’ remaining assets, clients and a number of its employees in a deal, which is expected to be finalized in November, reports Sifted, a media site affiliated with the Financial Times. Financial terms of the deal were not released. Railsbank did not return requests for comment by deadline.
The London-based Railsbank supports PSD2-era connections between banks and fintechs. Visa is among Railsbank's backers, forming a five-year partnership to deliver financial services in Southeast Asia. Railsbank is also a Visa principal issuer and part of Visa’s Fintech Fast Track program. According to Crunchbase, a website that tracks investments in private companies, Railsbank has raised just over $14 million in funds in six rounds since 2016.
When Wirecard filed for bankruptcy in late June as a result of an accounting scandal, it left more than $2 billion missing from its balance sheet. Former CEO Markus Braun was arrested and authorities were also pursuing COO Jan Marsalek.
Michaela Handrek-Rehle/Bloomberg
German administrators have called on Wirecard to sell off assets in its insolvency so creditors may recoup some of their losses. There are about 140 potential buyers for pieces of Wirecard, including the WCS unit, according to Law360. Complicating the sale is rival firms such as Adyen are luring Wirecard's clients.
Wirecard has agreed to sell off its Brazilian assets, according to the Financial Times, as an agreement had been signed for the sale to PagSeguro Digital, a New York-listed competitor.
Wirecard’s North American business is also seeking a potential buyer. The former Citi Prepaid unit has operated as a separate company and had more than 2,500 prepaid card programs at the time of its acquisition in 2016., German bankruptcy administrators reported that the sales process for the North American unit was well-advanced and that final acquisition offers are to be expected soon, according to the Financial Times.
Three of Wirecard’s biggest lenders have recently written down most of their exposure, with Commerzbank AG and ING Groep NV each taken a hit of €175 million (about $207 million) and French bank Credit Agricole SA suffering a loss of €110 million (about $130 million). These three banks are part of a 15 bank consortium that had provided Wirecard with a €1.75 billion (about $2.1 billion) credit line that had been drawn down by at least 90% when the company filed for insolvency, according to Bloomberg. Other lenders in the consortium include ABN Amro Bank NV, Landesbank Baden-Wuerttemberg, Barclays Plc, DZ Bank AG and Lloyds Banking Group Plc.
The Federal Reserve will seek comment on the current stress-testing regime with an eye toward increasing transparency and reducing volatility. Modifications would not go into effect until at least 2026.
The two companies continue to tick items off their year-end to-do list, which analysts hope will tee up the merger for finalization in early 2025. Regulatory approval remains a major question.
The industry agenda calls for amending longstanding rules like loan officer compensation, to nixing Biden-era plans trade groups say hurt both consumers and industry players.
The custody bank achieved its goal for the amount of deposits it placed into minority banks and community development financial institutions by the end of the year.
