Singapore Tells Wirecard to Keep Client Funds in Local Banks

(Bloomberg) -- Singapore has told Wirecard AG’s local entities to ensure they keep customer funds from their domestic payments processing business in the country’s banks, the financial regulator said.

Wirecard’s primary business activities in Singapore are to process payments for merchants and help companies issue prepaid cards, the Monetary Authority of Singapore said Tuesday in an emailed reply to questions.

“MAS has required Wirecard to ensure that they keep customer funds arising from these activities in banks in Singapore,” a MAS spokesperson said in the email.

Shares in the German firm have collapsed in recent days amid an accounting scandal and worries about Wirecard’s banking facilities.

The company on Monday acknowledged that 1.9 billion euros ($2.1 billion) previously reported as assets probably doesn’t exist. Bank of China Ltd., China’s fourth-largest lender, may write off most of the 80 million euros it is owed and not extend the credit line, according to people familiar with the matter.

On Tuesday, the Munich prosecutor’s office said former Wirecard Chief Executive Officer Markus Braun has been arrested.

Wirecard entities in Singapore are not currently regulated by the MAS, though the central bank has received a license application from the German firm under the new Payments Services Act, the regulator said.

The act provides for a grace period for entities conducting regulated activities to apply for a license, the MAS said. It may issue requirements to such entities during the grace period, it added.

Two local entities -- Wirecard Asia Holdings Pte and Wirecard Singapore Pte -- are on the MAS’s exemption list, according to the authority’s website.

Singapore is home to Wirecard’s Asia-Pacific headquarters and the company has been expanding aggressively in the region, which accounted for almost 45% of the group’s reported revenue in 2018, second only to Europe.

Last year, Singapore police raided Wirecard’s local offices after an employee in the city state alleged that a member of the company’s finance team engaged in accounting breaches.

Business Relationships

Meanwhile, there are signs that the Wirecard scandal is affecting its business relationships in the region. Grab Holdings Inc., the leading ride-hailing firm in Southeast Asia, said Tuesday the company is reviewing its partnership with the German firm.

“At this moment, there are no plans to have Wirecard process payments or acquire merchants for us,” Grab said in an emailed reply to queries from Bloomberg.

Earlier this year, both companies agreed to have Wirecard process payment transactions made via Grab’s mobile-based wallet in Malaysia, the Philippines and Singapore. The pact also involved Wirecard extending GrabPay to more merchants and shops.

That business, known as merchant acquisition, is one of Wirecard’s major propositions and there could be “a degree of nervousness” among retailers using the system, DBS Group Holdings Ltd. Chief Executive Officer Piyush Gupta said Tuesday.

“You will always find challenges and individual idiosyncratic problems in every industry –- and Wirecard is likely to be one of those,” Gupta said at the Bloomberg Invest virtual conference, when asked about the industry impact of the scandal.

“I don’t see that having a significant impact on confidence in general in the e-payments regime or the infrastructure across the board,” he added.

Wirecard’s regional operations cover Australia, Hong Kong, India, Indonesia, Malaysia, Myanmar, New Zealand, the Philippines, Thailand and Vietnam, according to its website.

©2020 Bloomberg L.P.