By Oliver Smith on Monday 13 June 2022
A €50bn merger to create a new European financial giant.
It would have been one of the most phenomenal fintech deals in history, the acquisition of a 150-year-old stalwart of Europe’s banking industry by a mere 18-year-old upstart.
Yet it never came to be, after Wirecard’s vast €1.9bn financial fraud was brought to light by Financial Times investigative reporter Dan McCrum in 2020, sinking the company and leaving Deutsche Bank with its $1.3 trillion worth of assets untouched.
In his new book Money Men, published this week and reviewed by AltFi here, McCrum reveals even more detail about how this tentative takeover emerged and, ultimately, what stopped it from happening,
In late 2018 Wirecard found itself on a tear, its share price reaching a high of over €26bn, which prompted some curious discussions.
The idea of a Deutsche Bank/Wirecard merger first emerged in early 2019, when Wirecard CEO Markus Braun had “some exploratory discussions with the top men at Deutsche Bank”.
This involved a pitch of “turning the bank into a technology company” given by Braun that February to both Deutsche Bank’s CEO Christian Sewing, and Paul Achleitner, chair of the bank’s supervisory board.
But after two meetings the Deutsche Bank execs “refused to talk to us” and the deal was as good as dead.
In August 2019 the idea was rekindled, this time by Wirecard COO Jan Marsalek’s PR guru, who McCrum only refers to as “Mr Samt”.
“Samt had an immodest proposal: reshaping the European financial system. Wirecard should buy Deutsche Bank, he said.”
In what became known by the code name Louis XIII (due to a bottle of cognac in Wirecard’s office), this time the idea was for a hostile takeover, with Wirecard looking to win over key investors and high-profile German politicians to force the deal, and quickly reshuffle Deutsche Bank’s management team.
“The chairman, Achleitner, would have to be axed immediately—too much of a canny operator. Sewing, the CEO, would be offered the supervisory board to run,” writes McCrum, describing it as “an audacious takeover of the decrepit [Deutsche Bank] by the new [Wirecard].”
Why did the idea of acquiring Deutsche Bank keep bobbing to the surface?
In McCrum’s telling, any “problems with Wirecard’s balance sheet would disappear into the depths of Deutsche Bank, never to be seen again.”
For the hostile takeover, management consultancy McKinsey & Co was drafted in to produce a 40-page report on what “WireBank” would look like.
The deal, they said, would “fully unlock the value in the complementarity of Bank & Tech” resulting in an extra €6bn in profits by 2025 and a combined market capitalization of €50bn.
Ultimately WireBank never came to be, Braun felt they should wait for Wirecard’s market capitalisation to return to above €20bn (versus Deutsche Bank’s then €13.65bn), which it never would.
By the end of 2019 McCrum’s reporting had begun to expose cracks in Wirecard’s financials and its share price was tanking, although it wouldn’t be until 25 June 2020 that Wirecard finally filed for administration.
Money Men: A Hot Start-up, A Billion Dollar Fraud, A Fight for the Truth by Dan McCrum is available from Amazon and other good booksellers on 16 June 2022 with an RRP of £20.
AltFi’s full review is available here.
