Deutsche Bank works on Wirecard Bank bailout
Germany’s largest lender confirms discussions with regulators over ‘financial support’ for stricken rival
Deutsche Bank is working with German regulators on a potential bailout of Wirecard Bank, the deposit-taking unit of the payments group at the centre of one of the country’s biggest postwar accounting frauds.
Wirecard Bank, which by the end of 2019 had €1.9bn in total assets, is based in a Munich suburb and is not part of its parent group’s insolvency proceedings, which were triggered last week after the company said cash was missing and its biggest business had been misrepresented.
Deutsche said in a statement on Thursday that it was “currently reviewing the possibility of providing Wirecard Bank AG with financial support”, adding that this was happening in co-ordination with Germany’s financial watchdog BaFin, the administrator of the collapsed group and the lending unit’s management.
“We are in principle prepared to provide this support in the context of a continuation of business operations, if such assistance should become necessary,” Germany’s largest lender said, declining to comment further. Deutsche neither disclosed how much money it might provide nor how the bailout could be structured.
Deutsche is in the middle of its own restructuring that was kicked off a year ago and includes the cutting of 18,000 jobs and a drastic reduction of its investment banking activities.
The Frankfurt-based lender has been lossmaking since 2014 and warned investors in April that its goal to break even on a pre-tax basis this year had become more difficult to achieve because of the economic repercussions of Covid-19.
BaFin confirmed that talks over the future of Wirecard Bank are taking place, adding that the regulator welcomed “any kind of support” for the lender, which is part of the deposit insurance scheme for Germany’s private banks.
Wirecard’s administrator, Munich-based lawyer Michael Jaffé, declined to comment. Mr Jaffé said on Tuesday that “numerous” companies had expressed interest in buying parts of Wirecard. Wirecard declined to comment.
BaFin last week sought to ringfence Wirecard Bank, the lender that the payments group has owned for more than a decade and holds most of its licences with credit card companies such as Visa and Mastercard.
The watchdog installed a special representative in the bank's headquarters to monitor management decisions and imposed a partial payments ban to prevent the lender transferring certain assets to Wirecard. Wirecard Bank by the end of 2019 reported a healthy capital ratio of 21 per cent common equity to assets.
After the lender’s owner Wirecard AG collapsed into insolvency last Thursday, BaFin was considering freezing assets at the bank but concluded that the lender’s situation was not bad enough to justify such a move, a person with first-hand knowledge of the matter told the Financial Times.
Deutsche has a history of bailing out struggling German rivals. Over the past decade, it acquired Postbank and Sal. Oppenheim, two lenders that ran into existential trouble and that later caused Deutsche a lot of headaches.
Bloomberg first reported about Deutsche’s willingness to provide financial support for Wirecard Bank.
BMW to ramp up production of electric vehicles
German carmaker races to comply with EU emission standards in face of sharp slowdown in sales
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BMW is to spend more than half a billion euros on ramping up its electric vehicle manufacturing capacity in Germany, as the Munich-based carmaker races to comply with strict EU emission standards amid a sharp slowdown in global auto sales.
The company’s plant in Dingolfing, Bavaria, its largest in Europe, would be able to produce battery-powered motors and parts for more than 500,000 vehicles a year by 2022, chief executive Oliver Zipse said.
BMW, which was one of the early pioneers of battery-powered cars, previously said it was on track to meet CO2 emissions targets for 2020 and 2021 despite the Covid-19 pandemic, avoiding large fines from Brussels.
The Dingolfing factory, which devotes 10 per cent of its production capacity to plug-in hybrid models, would be expanded tenfold, Mr Zipse added, in order to help BMW achieve its goal of having a quarter of its sales in Europe of models with an electric drive option by 2021.
Four production lines would be added to the existing eight lines during the next few years, the company said. Dingolfing will also expand its production of batteries, although BMW relies on other companies for its supply of battery cells.
The premium carmaker has fallen behind rival Volkswagen in developing new battery-powered models, despite producing the i3, one of the first mass-market electric cars since 2013.
Rather than building dedicated production sites for electric cars, BMW is instead opting for a flexible platform, in which models can be fitted with either a combustion engine, a plug-in hybrid system, or a battery-powered drivetrain.
The upcoming iX3 sport utility vehicle will be among the first models to offer all three variants.
In contrast, VW is devoting entire plants to electric vehicles. Last month, the last combustion engine car rolled off a production line at VW’s Zwickau factory, the former home of the Soviet-era Trabant. The site will now manufacture the ID.3, VW’s first mass-market emissions-free model.
However, Mr Zipse defended BMW’s versatile approach. “We are firmly convinced that we will need to continue developing all drivetrain types to achieve the best possible result for the environment,” he said.
“We know that many regions around the world still lack a sufficient charging infrastructure and only a small share of the generated energy is renewable,” he added. “For many customers in these regions, combustion engines remain the best option.”
BMW aims to offer at least 13 fully electric models by 2023, the year VW plans to have sold 1m emissions-free cars.
BMW warned in May that its auto profits could be wiped out in 2020, as it suffers from the cratering demand from the Covid-19 pandemic.
Gapping down
Other news:
- MEIP -13.3% (MEI Pharma and Helsinn Healthcare SA discontinue the phase 3 Study with pracinostat in AML after completing interim analysis)
- BLFS -7.7% (prices 5.175 mln common stock offering at $14.50/share)
- PLYA -4.4% (stock offering by selling stockholders)
- AKRO -2.2% (files for $300 mln mixed securities shelf offering)
- VXX -1.9% (trading lower with futures stronger)
- NVS -0.7% (resolves legacy litigation matters, finalizing settlement of speaker program litigation with US Government)
Analyst comments:
- NGG -2.5% (downgraded to Hold from Buy at HSBC Securities)
- LVGO -2.3% (downgraded to Neutral from Buy at Goldman)
- TEF -0.8% (downgraded to Hold from Buy at HSBC Securities)
Gapping up
In reaction to strong earnings/guidance:
- NUS +16.8% (guides Q2 revs above consensus), FIZZ +8.9%, FORM +4% (guides Q2 revs above consensus), LHC +2.5% (raises 2021 guidance to factor revenue and EBITDA growth from new acquisition)
Other news:
- VERO +52.7% (receives FDA 510(k) clearance to market and sell for Venus Viva MD)
- NIO +15.5% (reports June deliveries increased 179% to 3740 vehicles)
- DCOM +15.2% (to merge with BDGE)
- GNW +3.8% (to host special topics call)
- JBLU +3.3% (reaches agreement with pilots' labor union, per CNBC)
- COTY +3% (names Sue Y. Nabi Chief Executive Officer; Peter Harf, founder of the modern Coty, to be elevated to Executive Chairman)
- VNE +2.7% (finalizes the split of its JV, Zenuity, with Volvo Cars)
- PCG +2.5% (emerges from Chapter 11)
- CYDY +1.9% (releases mechanism of action animation for leronlimab in immuno-oncology)
- BA +1.9% (completed the certification flight tests on the Boeing 737 MAX)
- MAXR +1.9% (completion of Vricon Acquisition)
- GS +1.4% (files mixed securities shelf offering)
- SRPT +1.2% (announces agreement with Hansa Biopharma)
Analyst comments:
- CAR +6.3% (upgraded to Overweight from Equal-Weight at Morgan Stanley)
- TTMI +6% (upgraded to Buy from Hold at Needham)
- HIBB +5.7% (upgraded to Buy from Underperform at BofA Securities)
- AKAM +3.5% (upgraded to Outperform from Market Perform at Cowen)
- CRH +2.1% (upgraded to Outperform from Neutral at Credit Suisse)
>>> Up
* Assa Abloy Raised to Buy at Deutsche Bank; PT 220 kronor
* Boiron Raised to Buy at Oddo BHF (+)
* CRH Raised to Outperform at Credit Suisse; PT 38 euros (+)
* ERG Raised to Outperform at Mediobanca SpA (+)
* Heineken PT Raised to 106 euros from 90.80 euros at Berenberg
* Lloyds Raised to Buy at Investec; PT 36 pence (+)
* Nobia Raised to Buy at Handelsbanken; PT 62 kronor
* Pernod Ricard PT Raised to 165 euros at Berenberg
* Piaggio Raised to Accumulate at Banca Akros (ESN) (+)
* Rio Tinto Raised to Buy at Deutsche Bank
* Tesla PT Raised to $1,250 from $1,000 at Wedbush (+)
* Zalando Raised to Buy at MainFirst; PT 75 euros
>>> Down
* Alfen Cut to Hold at ABN Amro Bank; PT 38.50 euros
* Auto Trader Cut to Hold at Liberum; PT 515 pence
* Auto Trader Cut to Add at Peel Hunt; PT 560 pence (+)
* BHP Group PLC Cut to Hold at Deutsche Bank
* BNP Paribas Cut to Sell at DZ Bank; PT 28 euros (+)
* Deutsche Bank Cut to Sell at SocGen; PT 6.50 euros
* Deutsche Boerse Cut to Hold at LBBW; PT 165 euros (+)
* Europris Cut to Neutral at SpareBank; PT 50 kroner
* Heineken Cut to Neutral at JPMorgan; PT 80 euros
* MIPS AB Cut to Hold at Pareto Securities; PT 330 kronor (+)
* National Grid Cut to Hold at HSBC; PT 1,000 pence
* Norsk Hydro Cut to Hold at Nordea (+)
* Valmet Cut to Hold at SEB Equities; PT 25 euros
* Varta Cut to Sell at M.M. Warburg; PT 75 euros (+)
>>> Initiation
* Bossard Rated New Hold at Mirabaud Securities (+)
* CENIT AG Rated New Buy at MainFirst; PT 12 euros
* CM Rated New Buy at ABN Amro Bank; PT 23 euros
* va-Q-tec Rated New Buy at Bankhaus Metzler; PT 25.50 euros (+)
* Wacker Chemie Rated New Underperform at BofA; PT 55 euros
>>> Call
* AB Foods’ 3Q Update is Very Reassuring, Jefferies Says (+)
* Aena, Zurich and Vienna Top Airport Recovery Picks: Berenberg
* Assa Abloy Raised on Attractive Growth Prospects: Deutsche Bank (+)
* Auto Trader Shares Get Two Downgrades Amid Uncertain Outlook (+)
* Kingfisher Added to RBC’s Top 30 Ideas in 3Q Update, Diageo Out
* Meggitt Update In-Line With Market, Cash May Disappoint: MS (+)
* Insurance Top Pick in Financials, UniCredit and BNP in Banks: MS
* Heineken, Pernod, AB InBev PTs Lifted at Berenberg Amid Recovery (+)