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Wirecard Card Services, the UK subsidiary of Wirecard, returns to normal operation after the Financial Conduct Authority (FCA) lifted its ban on the embattled company. WDI stock is up.
Wirecard Card Services, the UK subsidiary of embattled financial services firm Wirecard AG (ETR: WDI) has unlocked its customer’s funds following the lifting of a ban placed by the UK’s Financial Conduct Authority (FCA). The ban was necessitated following Wirecard’s accounting fraud amounting to about EUR 1.9 billion. The company’s former CEO Markus Braun who was indicted in the fraud has been arrested and placed on bail after paying $5 million.
Wirecard stock is 45% up today. It was trading at EUR 4.73.
The Wirecard customers affected by the ban in the UK have expressed different experiences the situation cost them and this might stretch the company’s run into solvency as a trust gap had been created with its customers. The company’s stock has rebounded following its stellar performance after a previous bearish week which saw the company’s stock plunged by about 75% on June 25. The company’s stock has seen a 187% pump since it resumed trading on Monday.
Wirecard Current Woes and Unwinding, Improvement of the Situation in UK
Wirecard AG became the subject of the London-based Financial Times report in January 2019. The media outlet reported that a senior executive was suspected of “falsification of accounts” and “money laundering” in the company’s Asia-Pacific operations. As expected, the company refuted the claims and sued Financial Times “unethical reporting” and market manipulation.
The buried claim by Financial Times resurfaced with about $2 billion missing which can be linked to the inflated balance sheet charges levied against Wirecard ex-CEO Markus Braun.
The dire situation forced Wirecard to declare insolvency last week which also prompted the Financial Conduct Authority (FCA) to suspend the company’s operations. Wirecard has since started resuming operations to restore its service delivery. “There may be a delay before all card programmes are fully operational, so some customers could find themselves unable to transact immediately but we anticipate this lasting no longer than 24 hours,” Wirecard Card Solutions said in a statement Tuesday. “We apologize for the inconvenience to our valued customers that the temporary suspension caused.”
The company has further stated that there may be about 24-hour delay in restoring all card programs’ functionality.
The lifting of the ban imposed on Wirecard Card Service is just a phase in the long haul of turmoil the company will be passing through, at least till the authorities will resolve the missing cash saga. While there may be no such ban that will impact directly on customers across all regions of Wirecard’s operations, projections on the potential impact of the investigation may be too early to determine.