Wirecard shares plummeted more than 66 per cent this morning after the payments group announced its auditor could not confirm the existence of €1.9bn (£1.71bn) in cash.
The German firm today said there were indications that a trustee of Wirecard bank accounts had tried to “deceive the auditor and create a wrong perception of the existence of cash balances”. The €1.9bn cash hole is equivalent to a quarter of Wirecard’s balance sheet.
Shares in the payment processor plunged more than 66 per cent at market open, marking its biggest fall on record, before settling slightly at 63 per cent down at 4.45pm.
Wirecard registered a market value of €24bn at its launch on Germany’s Dax 30 just two years ago, replacing heavyweight Commerzbank, to sit in the ranks of giants such as Volkswagen, Siemens, and Deutsche Bank.
But today’s share price plunge means the firm is now valued at little over €4bn.
Wirecard today confirmed that it will postpone publishing its 2019 financial accounts, after EY said they required additional audits. In a statement, the company said that if financial reports for 2019 were not published by 19 June, then €2bn worth of loans to the company could “be terminated”.
The announcement further unsettles the position of chief executive Markus Braun, whose tenure at the helm has seen Wirecard plagued with allegations of financial inaccuracy.
“It is currently unclear whether fraudulent transactions to the detriment of Wirecard have occurred,” Braun said today. “Wirecard will file a complaint against unknown persons.”
The Aschleim-headquarted company, which offers customers electronic payment transaction services and risk management, has been repeatedly accused of inflating its accounts, and has delayed its financial statements four times this year.
In April, KPMG said it was unable to verify whether large parts of the fintech’s profits were real.
Meanwhile last October, Wirecard staff were reported to have fraudulently inflated profits at Wirecard’s Dubai and Dublin subsidiaries, the Financial Times reported.
The firm’s headquarters were searched in May by German police as part of a probe involving the company’s senior management.
“Having questions being asked about the reliability of your accounts is bad enough, but to make matters worse, if the group doesn’t publish its 2019 results by tomorrow it runs the risk of being in breach of covenants,” said David Madden, market analyst at CMC Markets.
“Credit lines can be tricky to achieve when your company is in good health, let alone when some people don’t believe your figures.”
Wirecard was contacted for comment.