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The chief executive of Wirecard resigned on Friday after the search for $2.1 billion of cash missing from the embattled electronic payments firm hit a dead end in the Philippines. Markus Braun, who built the German company into one of the hottest investments in Europe, leaves Wirecard facing a looming cash crunch amid allegations of fraud over the missing money. In a statement, the company said James Freis, a former compliance officer at Germany’s stock exchange, had been appointed as interim CEO.

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(Bloomberg) — The meltdown at Wirecard AG is raising questions about the company’s complicated relationship with the troubled SoftBank Group Corp.The Japanese conglomerate signed a strategic cooperation agreement with the payments firm last year and agreed to buy $1 billion of Wirecard convertible bonds, although that exposure was later cut through a complex transaction. This month, a partner at SoftBank’s investment arm was on track to become a supervisory board member at Wirecard.Then on Thursday, Wirecard revealed that auditors had been unable to find about 1.9 billion euros ($2.1 billion) in cash that was supposed to be held in Asian banks. The company suffered one of the worst stock slumps in the history of Germany’s benchmark index, then fell again sharply on Friday.The damage for SoftBank may be more to its reputation than its finances. The Japanese company last April unveiled a complicated transaction for about $1 billion in convertible bonds for Wirecard. That ostensible support sent Wirecard’s stock surging, damaging short sellers.In the end though, SoftBank never put in money itself. Instead, SoftBank employees and the sovereign wealth fund Mubadala financed the deal, and then sold their interests through structured notes. Those notes plunged 73% on Thursday to about 19.9 euro cents and have dropped a further 11.7 euro cents on Friday.“Everything about that deal is not what you would call textbook corporate governance,” said Justin Tang, head of Asian research at United First Partners in Singapore. “This is the last thing Son needs now as he deals with the fallout from Vision Fund losses.”Kenichi Yuasa, a spokesman at SoftBank, declined to comment.SoftBank, led by Masayoshi Son, reported a record operating loss in May, triggered by the writedown of portfolio companies at its Vision Fund investment arm. The company does not have direct financial exposure to Wirecard, according to a person familiar with the matter who asked not to be identified discussing confidential agreements.It’s not clear yet what Wirecard’s meltdown means for its alliance with SoftBank. While auditors are working to verify the company’s finances, Chief Executive Officer Markus Braun, the company’s biggest shareholder, portrayed the company as a potential victim.Samuel Merksamer, a partner at SoftBank’s Vision Fund, was supposed to join Wirecard’s board, with an announcement coming as soon as this month, Bloomberg News has reported.The alliance between the two companies was aimed at facilitating partnerships between Wirecard and SoftBank’s portfolio companies, including Auto1 Group, Brightstar and Oyo Hotels & Homes. SoftBank will hold its annual shareholders meeting next Thursday.“The president will need to explain this series of failures to shareholders at the AGM next week,” said Koji Hirai, head of M&A advisory firm Kachitas Corp. in Tokyo.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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(Bloomberg) — Wirecard AG shares continued their free-fall after the two Asian banks that were supposed to be holding 1.9 billion euros ($2.1 billion) of missing cash denied any business relationship with the German payments company.Wirecard now faces a potential cash crunch. The company warned Thursday that loans up to 2 billion euros could be terminated if its audited annual report was not published on Friday. Analysts at Morgan Stanley estimated that Wirecard has available cash of around 220 million euros, if it cannot locate the missing $2.1 billion.BDO Unibank Inc., the Philippines’ largest bank by assets, and the Bank of the Philippine Islands said in separate statements on Friday that Wirecard isn’t a client.“It was a rogue employee who falsified documents and forged the signatures of our officers,” BDO Unibank Chief Executive Officer Nestor Tan said in a mobile phone message. “Wirecard is not even a depositor — we have no relationship with them”.The Bank of the Philippine Islands said in a separate statement that Wirecard isn’t a client and it continues to investigate the issue.Wirecard shares plunged 24% at 9:11 a.m. in Frankfurt on Friday, taking the stock’s losses to 71% since Wednesday’s close. The company that was worth 24.6 billion euros in September 2018 when it entered Germany’s Dax index is currently valued at about 3.4 billion euros.The denials from BDO and BPI follow a statement on Thursday from Wirecard, which claimed that auditor Ernst & Young couldn’t confirm the location of the missing cash that was supposed to be held in Asian banks and reported that “spurious balance confirmations” had been provided.BDO has reported the Wirecard issue to Bangko Sentral ng Pilipinas, the Philippines central bank, Tan said.The crisis has engulfed Wirecard in recent days. The payments company suffered one of the worst stock slumps in the history of Germany’s benchmark index after warning that as much as 2 billion euros in loans could be called due if its audited annual report, delayed for the fourth time, was not published by June 19.Wirecard spokespeople did not immediately return calls and emails for comment.Read More: Wirecard Suspends Executive After $2.1 Billion Goes MissingWirecard Chief Executive Officer Markus Braun has painted the company as a potential victim. The CEO has been resisting calls to resign and aggressively defending the company against accusations of accounting fraud, led by a series of articles in the Financial Times.“It cannot be ruled out that Wirecard has been the victim in a substantial case of fraud,” Braun said in a statement published overnight. The company temporarily suspended its outgoing Chief Operating Officer Jan Marsalek, it said in a statement late Thursday. Marsalek — who has been suspended on a revocable basis until June 30 — had tried to get in touch with the two Asian banks and trustees over the past two days to recover the missing money, but wasn’t successful, a person familiar with the matter said Thursday. It’s unclear if the funds can be recovered, the person added.“Given the magnitude of the cash balances in question, new creditor risks and severity of the share price drop, we believe these board changes are unlikely to be enough to restore market confidence in the near-term,” said Robert Lamb, analyst at Citigroup, in a note Friday. (Updates with context throughout, analyst comment in final paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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(Bloomberg) — The cluster of oil tankers off China’s coast is growing and the vessels are waiting longer to offload their cargoes amid a lack of onshore storage space after a buying spree earlier this year.The number of oil-laden tankers parked in Chinese waters has swelled since the start of the month with almost 200 ships expected over the course of June, according to vessel-tracking information compiled by Bloomberg and data intelligence firm Kpler. Crude imports surged to a record in May as demand rebounded after the easing of lockdown restrictions.The congestion illustrates the explosion in purchases by Chinese refiners as the country re-opened after shutting down to contain the coronavirus. The rush for cheap crude is overwhelming port infrastructure and storage amid an influx of cargoes from the Middle East, Latin America, Russia and West Africa.China’s oil demand rebounded rapidly from the demand destruction wrought by the outbreak, but there are concerns about a possible second wave of infections after new cases emerged in Beijing. However, Chinese crude imports are expected to expand further this month, with Kpler estimating overseas shipments could reach more than 14 million barrels a day. That would be a jump of over 20% from the record set in May.At least 32 vessels are sitting off the coast, up from around two dozen earlier in the month, with one ship that arrived in May set to take more than four weeks to discharge its full cargo due to limited tank space. That compares with a typical pre-virus wait time of around five days for a ship to offload.Almost half of the waiting tankers are Very-Large Crude Carriers, while the rest are smaller Aframaxes and Suezmaxes. Vessels have arrived at ports including Qingdao, Rizhao, Yantai, Tianjin and Yingkou, according to ship-tracking data and broker reports.The VLCC New Journey, which loaded Angolan oil in mid-April, arrived around May 19 off Shandong, the home to most of China’s independent refiners. It could only discharge about half of its 1.9-million barrel cargo at Rizhao on June 2 because of limited storage space before heading back to its anchorage, according to refinery officials with direct knowledge of the matter. The rest of the crude will be offloaded at a different terminal later this month, they said.Swelling InventoriesStockpiles at seven ports in Shandong province were at almost 48 million barrels as of June 12, the highest level in four months. Inventories fell about 10% through the week ended June 19.Processing rates by Shandong’s independent refiners, known as teapots, surged to a record earlier this month, rising strongly after hitting a low in February due to virus-driven lockdowns. China’s crude inventories are expected to gain by 440 million barrels during the first half of this year, the most ever for any country during a six-month period, according IHS Markit.While most of the inbound crude is for refiners, a portion has been purchased by traders which last month sought to take advantage of the premium of Chinese crude futures to the global benchmark Brent, according to commodities researcher ICIS. The oil is delivered into storage monitored by the Shanghai International Energy Exchange, allowing traders to offset their short positions and bank a profit, said Li Li, an analyst at ICIS.At its peak, the mark-to-market profit was $7 a barrel in May, but the spread has since flipped to a loss of $2, making the trade no longer attractive, said Li, adding that less buying from traders will help to ease congestion next month.(Updates Shandong stockpiles in eighth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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