Top lenders deny involvement in missing $2.1 billion Wirecard fund

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is looking into the alleged involvement of two of the country’s largest banks in a fraud involving the $2.1 billion missing funds of Germany-based digital financial technology leader Wirecard AG.

BSP Governor Benjamin Diokno said the regulator is aware of reports about Wirecard and is already looking into the matter.

“The BSP is aware of reports about German payment company Wirecard and is already investigating it,” Diokno said.

Diokno said the report submitted to the central bank last June 9 is covered under the report on financial crimes and losses.

BDO Unibank Inc. of the Sy family and Ayala-led Bank of the Philippine Islands (BPI) have denied involvement in the fraud.

Wirecard’s auditor Ernst & Young (EY) discovered that escrow accounts at two banks in Asia holding $2.1 billion to manage risks for merchants using the company’s payment services were missing, prompting its chief executive officer Markus Braun to step down Friday.

Bloomberg earlier reported that BDO was one of the two Asian banks involved in the search for Wirecard’s missing funds.

Nestor Tan, president and chief executive officer at BDO, said the largest lender in the Philippines was used and not a party in the Wirecard scam.

“Wirecard is not a client. The document claiming the existence of a Wirecard account with BDO is a falsified document and carries forged signatures of bank officers,” Tan said, adding the matter has been reported to the BSP.

BDO has dominated the country’s banking sector in terms of assets, capital, deposits and loans. As of the end of December, the bank’s assets stood at P3.1 trillion while its capital base amounted to P370.43 billion.

Fo its part, BPI, the oldest bank in Southeast Asia,   said Wirecard was not its client.

“Their external editor presented to us a document that claimed that they are a client. We have determined that the document is spurious,” a BPI spokesperson said.

BPI, the country’s third largest private lender with assets of P1.91 trillion, said it would continue to look into the matter.

Despite their denial, both banks admitted looking into the involvement of two of their employees in the scam.

BDO has terminated the marketing officer who allegedly fabricated a bank certificate in favor of EY, while BPI placed a junior officer on preventive suspension for allegedly issuing a certification claiming that the German fintech had $1.05 billion worth of funds in the Ayala-led bank.

Wirecard e-Money Philippines Inc. has been granted an electronic money issuer license by the BSP. It is still in the process of establishing its local EMI business and has only one corporate client with 20 prepaid cards issued.

Aboitiz-led Union Bank of the Philippines is now evaulating its partnership with the Germany-based financial services provider.

“We are looking at it. It is up to the board. We need to understand what happened because it did not involve us,” a bank official who requested anonymity said.

UnionBank and Wirecard inked a partnership agreement last February to make banking services more convenient and efficient for corporate customers in the financial services ecosystem.