Wirecard is to be deleted from Germany’s blue-chip Dax index, weeks after the payments provider’s spectacular collapse into insolvency following the revelation of a long-running fraud, the Financial Times reported. Once the country’s most celebrated financial tech group, Wirecard was first promoted to the Dax — which contains Germany’s 30 leading companies — in 2018, when it replaced the ailing Commerzbank.

Austria has experienced plenty of scandalous bank failures in the past decade, not least at Hypo Alpe Adria, the house lender of the late Freedom Party leader Joerg Haider, Bloomberg News reported. Yet the fraud that brought down tiny Commerzialbank Mattersburg im Burgenland AG raises questions for financial regulators and auditors that have uncomfortable echoes of the Wirecard AG debacle in neighboring Germany.

The number of business insolvencies among German companies decreased by 9.9 percent in May year-on-year to just above 1,500, the country's Federal Statistical Office (Destatis) announced on Monday, Xinhuanet reported. However, economic problems caused by COVID-19 had not yet been reflected by an increase in insolvencies due to the government suspension of filing for insolvency implemented in March, Destatis noted.

Germany’s ruling coalition is at odds over extending a freeze on insolvency rules put in place to avoid a wave of corporate bankruptcies due to the coronavirus crisis, Reuters reported. In March the government gave companies that find themselves in financial trouble due to the pandemic a respite by allowing them to delay filing for bankruptcy until the end of September.

German prosecutors suspect Wirecard AG extended large loans to partner companies before its implosion in June, at a time when the payments company was already facing media reports alleging accounting fraud, Bloomberg News reported. The prosecutors surmise the loans by the disgraced German firm may have been unsecured and may have been made to partner companies in Dubai, Singapore and the Philippines, a person familiar with the matter who asked not to be identified discussing the private information said.

Deutsche Lufthansa AG warned that compulsory dismissals are likely in Germany amid slow progress in talks with unions, stiffening its tone as it braces for years of reduced demand, Bloomberg News reported. Europe’s biggest airline posted an adjusted operating loss of 1.7 billion euros ($2 billion) in the second quarter -- its biggest ever -- wrapping up a dismal set of results for carriers in the region after the coronavirus grounded virtually all passenger flights.

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

Commerzbank took a greater hit from the collapse of Wirecard in the second quarter than from the economic fallout of the coronavirus pandemic, according to people familiar with the matter, the Financial Times reported. Germany's second-largest listed lender, which is embroiled in a leadership crisis after both its chairman and chief executive announced plans to resign last month, wrote off €175m of loans it made to the defunct payments provider, which filed for insolvency in June.

The German body in charge of regulating auditors is examining the work of EY, the auditor that approved the books of collapsed payment services firm Wirecard, the German Economy Ministry said on Monday, Reuters reported. The ministry said Auditors’ Regulator (Apas) had upgraded a preliminary investigation that had been running since October 2019, when the Financial Times first reported allegations of fraud at Wirecard, into a full formal regulatory inquiry.

The Wirecard AG scandal could spark a revamp of how the European Union carries out financial supervision, top official Valdis Dombrovskis told the Financial Times, Bloomberg News reported. The German tech company’s collapse shows that previous attempts to bolster financial watchdogs in Brussels were a “missed opportunity” and need another push, according to Dombrovskis, the European Commission’s executive vice-president for economic policy. “We are looking at how we can strengthen the system to avoid that kind of situation happening again,” he said in an FT report published Sunday.