Wirecard implosion tears through European banks’ bottom lines

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Wirecard AG’s spectacular collapse is leaving a gaping hole in the income statements of its European banks.

While only three of the biggest lenders to the German payments company have reported earnings so far, all wrote down virtually their entire exposure. Commerzbank AG and ING Groep NV each took a hit of about 175 million euros ($207 million), according to people familiar with the matter, more than half of their profit for the second quarter. Credit Agricole SA suffered a loss of about 110 million euros.

Wirecard filed for insolvency in June after admitting that almost 2 billion euros in previously reported as cash didn’t exist. The scandal has continued to widen since then and now threatens to engulf top politicians, regulators and auditors.

Commerzbank, Credit Agricole and ING are just three out of 15 banks that made up the consortium behind a 1.75 billion-euro lending facility to Wirecard that was about 90% drawn when the company collapsed, Bloomberg has reported.

Other large lenders to Wirecard are ABN Amro Bank NV and Landesbank Baden-Wuerttemberg, with an estimated exposure of about 180 million euros each. Barclays Plc, DZ Bank AG and Lloyds Banking Group Plc probably lent about 110 million euros each.

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