Tech

Wirecard's UK unit confirms plan to sell assets after disgraced payments firm goes bust

Key Points
  • Wirecard Card Solutions will meet Friday to outline the terms of a sale of its card technology and associated U.K. assets to Railsbank.
  • Munich-based Wirecard filed for insolvency in June after the revelation that 1.9 billion euros had disappeared from its balance sheet.
  • The news comes after thousands of U.K. consumers were temporarily locked out of banking apps due to temporary regulatory action.
An employee demonstrates the Wirecard AG online payment smartphone app on the company's exhibition stand at the Noah Technology Conference in Berlin, Germany, on Thursday, June 13, 2019.
Krisztian Bocsi | Bloomberg via Getty Images

Wirecard Card Solutions, the U.K. unit of disgraced German payments company Wirecard, has announced it will sell some assets to British financial technology company Railsbank in a solvent wind-down.

The company said it would meet on Friday to present a proposal outlining the terms of a sale of its card technology and associated U.K. assets as well as the transition of its customers and employees to Railsbank. The aim is to complete a migration of Wirecard Card Solutions' clients to Railsbank by November.

"Our hope is that our programme managers will support our proposal and we can move forward in a positive way for all parties," said Tom Jennings, managing director of Wirecard Card Solutions. "I would like to thank our customers for their ongoing support as well as Mastercard and Visa for their help in making this transition as seamless as possible."

Munich-based Wirecard filed for insolvency in June, marking a dramatic downfall for a company once revered as one of Germany's hottest tech businesses. The proceedings were initiated following an accounting scandal that reached its climax when Wirecard admitted 1.9 billion euros ($2.3 billion) was missing from its balance sheet.

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What happened to Wirecard?

Former Wirecard executives including longtime CEO Markus Braun have been arrested on suspicion of orchestrating a 3.2 billion euro commercial fraud. Munich prosecutors are also investigating Wirecard for suspected money laundering. For its part, Wirecard has said it will not be making any further statements.

News of Wirecard's U.K. asset sale comes after thousands of British consumers were temporarily locked out of their accounts with online banking apps that relied on Wirecard to process payments. The tumultuous episode was the result of a temporary halt to Wirecard's operations enforced by the Financial Conduct Authority, the U.K.'s financial services watchdog. The regulator said it took such action to ensure customers' funds are protected.

Railsbank, the firm buying Wirecard's U.K. operations, sells banking software to clients which use its technology to develop their own digital financial services products. The company was founded in 2016 and is backed by payments giant Visa.

"We are delighted to have come to this agreement with Wirecard Card Solutions and thank its team for working positively with us during the process," said Nigel Verdon, Railsbank's co-founder and CEO. "At the end of the day, customer and team needs are our priority."