As collapsed fintech Wirecard is looking to sell its global arms, rival Railsbank has placed the latest bid to purchase its United Kingdom-based subsidiary, Wirecard Card Solutions (WCS).
This came after the Asian and North American business of the German fintech were seeking buyers. Thus, Railsbank has joined a global army of 140 companies willing to buy local arms of Wirecard.
According to Sifted, Railsbank will acquire WCS’ assets, clients, and several employees, which will in turn strengthen its business. Notably, Railsbank was one of the key competitors of Wirecard in the UK.
However, the amount involved in the bid is not yet known.
Enron of Fintech
Once a highflying Europen fintech company, Wirecard collapsed in June as its auditors could not find 1.9 billion euros held as cash in the company’s books. This resulted in the ousting and arrest of many company executives, including its long-reigning CEO, Marcus Braun.
The company also admitted that the missing amount might have never existed and has already filed for insolvency.
With the collapse of the parent company, the UK regulator also went after the local business and briefly suspended its license, creating another dent in its already affected business.
At that time Railsbank founder, Nigel Verdon also supported the Financial Conduct Authority (FCA) crackdown and raised concerns about the business practices. Furthermore, he compared the fintech with the infamous US financial fraud company, Enron.
Moreover, he raised concerns about the profitability of the local subsidiary and its ability to run independently after the parent’s collapse. Notably, WCS reported a pre-tax profit of £2.5 million in 2018.
Despite the bid, the deal might not go through until a settlement is agreed upon for the many litigations raised against the fintech in various jurisdictions. Wirecard subsidiaries also lost notable clients, who ran to local competitors to facilitate their payment needs.