The fallout from a major accounting scandal continues for Wirecard, trickling down to its foreign operations as the German payment processor’s North American unit said it is looking for a buyer, while local regulators in the U.K. and Singapore have put restrictions on the company’s subsidiaries.
Pennsylvania-based Wirecard North America said in a statement late Monday that it’s seeking acquisition and has hired an investment bank to handle the sale process. The U.S. subsidiary is attempting to distance itself from its troubled parent company, which filed for insolvency protection last week, owing creditors nearly $4 billion, after a $2.1 billion hole was revealed in its balance sheet and its former CEO was arrested in Germany on charges of accounting fraud.
Wirecard North America was acquired in 2016 from Citigroup and was formerly known as Citi Prepaid Card Services. The deal was part of Wirecard’s strategy to expand into the U.S. market and grow globally.
The subsidiary asserted that it is a “self-sustaining entity” that is “substantially autonomous” and assured potential buyers that all its “contractual obligations will continue to be honored.” It added that its client funds “remain safe and protected at well-capitalized” banks — Sunrise Bank, Fifth Third Bank and Peoples Trust Company — with “verifiable documentation of accounts.”
“Wirecard North America continues to operate without any disruption to clients and cardholders,” Managing Director Seth Brennan said.
The same could not be said of Wirecard’s British subsidiary, which was forced by the U.K.’s financial watchdog to cease operations last week. Thousands of consumers who have accounts with smaller fintechs, such as Curve and Pockit, that rely on Wirecard’s technology had their funds frozen.
The Financial Conduct Authority said Monday night that it would lift the order after an industry group raised concerns that the decision would harm low-income users who don’t have access to mainline banking services and depend on the accounts to receive their government benefits.
Singapore’s central bank also placed restrictions on Wirecard’s entities in the city-state. The regulator said Tuesday that it ordered the businesses to hold customers’ funds in segregated accounts with Singaporean banks.
The central bank also said Wirecard had informed the regulator that it is “assessing its ability to continue providing its services” in the country and that service disruptions may occur if the company “ceases operations” in Singapore.