The UK subsidiary of the collapsed German payment processor and financial services provider Wirecard has officially decided to wind down its business.
The decision comes as its rival Railsbank has agreed to purchase some Wirecard assets – including existing client business – and take on some of its employees. The winding down was confirmed in an announcement from the UK’s Financial Conduct Authority (FCA), which has said that the business will continue to trade while alternative arrangements are being made with its card providers.
The winding down comes as a class-action lawsuit has been filed in the US on behalf of Wirecard investors that acquired shares between October 31, 2018 and July 6, 2020. The action follows the German parent company filing for insolvency, with the loss of an estimated loss of 730 jobs.
The movement of Wirecard customers to Railsbank is expected to be completed within three months. But this will be far from the end of a saga that may not be fully concluded for a long time.
The exposures that were revealed by the Wirecard collapse highlight the fact that flaws can be present – if not immediately obvious - in any market that gives the appearance of being well regulated. The timing of Wirecard’s collapse may also mean that German regulators will be looking inwards especially closely - to see what has happened within its borders - as well as outwards. As Wirecard’s problems have come to light hot on the heels of the ever-growing Cum-Ex investigations - which began in Germany – it would be surprising if the German authorities are not especially alert to the need to leave no stone unturned.