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September 7, 2020

Deutsche Bank drops out of race to acquire Wirecard Bank

Deutsche Bank has reportedly decided not to buy the banking unit of scandal-plagued payment company Wirecard over its sale price.

Wirecard’s insolvency administrator Michael Jaffe is seeking at least €100m ($119m) for the assets of Wirecard Bank, instead of liquidation.

Deutsche Bank had submitted a bid for some of the German assets of Wirecard.

However, Jaffe believed that the Frankfurt-based bank’s bid was too low.

A spokesman for Deutsche Bank said that buying Wirecard Bank is only one of the bank’s many options to expand its payments business.

Deutsche Bank CEO Christian Sewing is leveraging the lender’s market share in payments to apply his strategy.

Sewing said that Wirecard assets will be bought only if its payments technology is better than that of his bank.

The bank’s corporate banking division, which runs the payments unit, is the only division that received significant investment lately.

Wirecard scandal

In June 2020, Wirecard filed an application to open insolvency proceedings with the Munich District Court, reeling from a billion-dollar balance sheet scandal.

Its auditors Ernest & Young (EY) said Wirecard owes ‎€4bn ($4.5bn) to creditors after it admitted that €1.9bn ($2.1bn) had gone missing from its books.

The scandal led to the arrest of former Wirecard CEO Markus Braun and other executives on suspicion of running a criminal racket that defrauded the creditors.

However, they denied any wrongdoing, while former Wirecard COO Jan Marsalek is currently on the run.

Jaffe has been selected to offload Wirecard’s assets and recover the missing amount the company owes banks and creditors.

He also agreed to sell Wirecard’s operations in Brazil and the UK.

Last week, Lawmakers in Germany opened a parliamentary probe into Wirecard.

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