Germany’s economy is losing steam but will do slightly better than government forecasts as fears grow over rising coronavirus infections, according to the country’ s five leading research institutes, Bloomberg News reported. Gross domestic product will contract by 5.4% in 2020 and grow 4.7% next year, the experts predicted in their latest bi-annual outlook published Wednesday. In their spring report, they expected a contraction of 4.2% this year and growth of 5.8% in 2021.
German banks should prepare for a surge in insolvencies as the coronavirus crisis pushes weaker companies over the edge and puts a question mark on the country’s property boom, the Bundesbank said on Tuesday, Reuters reported. With part of a government moratorium on insolvencies now expired, the German central bank said corporate insolvencies could rise by more than 35% by March to more than 6,000 per quarter, a level not seen since 2013.
Businesses across Singapore have been left scrambling to process payments for everything from hotel stays to telephone bills after the city-state’s regulator shut down the payment services of fraudulent German group Wirecard, the Financial Times reported. Cafés, restaurants, hotels and mobile network providers were left with no payment processing systems after the Monetary Authority of Singapore, the de facto central bank, late last month ordered Wirecard to cease payment services in the city-state. Some banks in Singapore had advised their clients to consider switching payment proce
Germany has presented plans to strengthen financial regulator BaFin’s powers and tighten accounting rules, one day before the start of a parliamentary probe into one of the country’s biggest corporate failures, Bloomberg News reported. The collapse of Wirecard AG this year exposed significant cracks in Germany’s financial oversight, as authorities failed to catch accounting issues at the digital-payments company despite ample warning. Slow decision-making and fragmented responsibilities appeared to allow the problems to go undetected.
Germany has an extra reason for cheer on Saturday when it celebrates 30 years as a united country: the vanished East German regime is picking up the tab, The Irish Times reported. After a long search – and lengthy court battle – Switzerland’s highest court has ordered Julius Bär bank to pay out 150 million francs (€140 million) that a subsidiary helped hide for East Germany’s ruling party in the dying days of the socialist state. It’s the latest tranche of money clawed back by German authorities in a 30-year game of financial hide-and-seek.
Germany is bracing for a surge in insolvencies starting Thursday, when a moratorium to help companies survive the coronavirus outbreak comes to an end, Bloomberg News reported. From this month, businesses that can’t pay their bills will again be forced to seek court protection. Since March, that hasn’t been the case for those that could pin their lack of liquidity on the pandemic and show they stood a good chance of overcoming the crisis. “Those that could be saved were rescued,” said Tillman Peeters, managing partner at Frankfurt-based financial advisory firm Falkensteg.
In Germany the duty to file for insolvency will apply again from 1 October for all businesses facing liquidity problems, bringing risks for companies which delay filing for insolvency, and making payments contestable again, Pinsent Masons reported. For businesses in crisis due to the impact of Covid-19, the German Federal Government had in March suspended the duty to file for insolvency until 30 September 2020. This suspension was extended, but only for overindebted businesses as far as they are still solvent.
Singapore’s central bank on Wednesday directed embattled German payments firm Wirecard to cease providing services in the city state and return all customers’ funds, Reuters reported. Wirecard, which primarily processes payments for merchants and helps companies to issue pre-paid cards in Singapore, filed for insolvency in June after a 1.9 billion euro (1.8 billion pounds) hole was discovered in its books. Singapore police are among a number of global authorities investigating Germany’s biggest post-war corporate fraud.
In a related story, the Financial Times reported that German police raided the headquarters of state-owned lender KfW this month as part of a criminal investigation into employees who approved an unsecured €100m loan to the collapsed payments group Wirecard. A spokesperson for KfW confirmed the raid, which happened two weeks ago, and said that the bank was co-operating with the investigation by Frankfurt prosecutors. Wirecard’s own headquarters on the outskirts of Munich were raided by police on Tuesday as part of the same investigation, according to people familiar with the matter.
EY was warned in 2016 by one of its own employees that senior managers at Wirecard may have committed fraud and one had attempted to bribe an auditor, The Irish Times reported. The revelation that an EY employee identified suspicious activity at Wirecard four years before the payments group imploded in Germany’s largest postwar corporate fraud will increase the pressure on the accounting firm, which audited Wirecard for more than a decade and provided unqualified audits until 2018.