Only days before wirecard collapsed, a little german lender made a big bet on markus braun.
With investors nonetheless reeling from results of a special review into wirecards accounting, oldenburgische landesbank (olb) replaced deutsche bank as an integral lender to mr braun, the after that chief executive regarding the repayments organization, its public face and biggest shareholder.
Your choice by olb, whoever headquarters are nestled inside sleepy university town of oldenburg in north-west germany, is emblematic of the transformation since a consortium including us exclusive equity powerhouse apollo obtained the financial institution from its longtime owner, insurance coverage heavyweight allianz, for 300m in 2017.
As soon as mocked as omas liebste bank, or grandmas favourite lender, due to its conservative method, the latest proprietors embarked on a number of mergers that have switched the once-regional lender into an organization with nationwide aspirations and a more impressive desire for food for danger.
In may, sufficient reason for wirecards stocks currently under great pressure, olb signed a 120m loan contract with mr braun, relating to a document seen by the financial days. that amount had been higher than olbs net profits for 2019 and comparable to a tenth of their total common equity level one.
Olb these days has a company model that rests on a top desire for food for danger, said gunter dunkel, a senior financier with years of experience in northern germany and former chief executive of nordlb.
Over the past 36 months, olbs stability sheet has actually ballooned by more than a third while its web profits hopped fourfold. even though the banks retail business continues to have 126 branches and yields half its incomes, 20 % today originates from specialised lending such as for instance funding takeovers, commercial real-estate and shipping.the remainder comes from old-fashioned commercial financial for business consumers.
Olbs return on equity increased fivefold to 10.4 % a year ago, which makes it one of the few german finance companies to make its cost of money, which analysts estimate at about 10 per cent. apollo declined to review.
By lending to mr braun, olb ended up being stepping to the shoes of deutsche bank, germanys biggest loan provider. deutsche had lent the austrian administrator 150m in late 2017, accepting half his seven % risk in wirecard as security.
But after allegations of bookkeeping fraudulence had been over and over repeatedly raised by whistleblowers and reported because of the financial instances, deutsche bank grew progressively uneasy utilizing the loan and didn't renew it, in accordance with individuals knowledgeable about the matter. deutsche bank declined to comment.
Since it took regarding the experience of wirecards embattled chief executive, olb wanted a lot more than mr brauns shares as collateral. the 50-year-old additionally pledged two homes he had in vienna and one in austrian ski resort kitzbhel as additional security, based on the document seen by the financial instances. the homes were well worth 30m between them.
In a statement, olb said it granted mb beteiligungsgesellschaft mbh [mr brauns family members office] a margin loan for redemption of existing debts that was collateralised by wirecard shares alongside possessions.
A lawyer representing mr braun informed the financial days the margin loan ended up being relocated from deutsche bank to prevent an enforced sale of the shares pledged as collateral, which wirecards previous leader considered undervalued.
For this purpose, substantially worse credit conditions [for the brand new loan] had been accepted, the lawyer told the financial instances.
Two weeks after securing the loan from olb, mr braun invested 2.5m purchasing even more wirecard stock in a deal now being examined because of the german market regulator bafin over prospective breach of insider trading guidelines. mr brauns buy of additional shares for 2.5m had been funded with borrowed money, according to his lawyer.
But even while mr braun purchased more wirecard stock, he in the course of time just received on 50 % of the 120m loan while he couldn't provide adequate physical collateral, eg home, to tap more of it, stated two different people knowledgeable about the arrangement.
The danger for olb ended up being really rather manageable, one of many individuals stated, pointing to a situation where olbs reduction would be limited by the 30m not protected because of the worth of mr brauns properties in case wirecards shares became worthless.
As wirecard begun to implode in the middle of summer, olb was able to offer the stocks in time to escape losings on loan, individuals acquainted the matter said.
On summer 18, wirecard disclosed that 1.9bn in money purportedly held in asian bank records couldn't be verified by its historical auditor ey. regulatory filings reveal that a 4.5 % risk possessed by mr braun was obsessed about that day therefore the after one for a typical price of 28 per share, relating to financial days calculations on the basis of the filings.
Days later on, mr braun had been arrested on suspicion of accounting fraud and market manipulation. he had been circulated on bail and has now constantly rejected any wrongdoing.
On summer 25, wirecard filed for insolvency and shares in company long regarded as a european tech winner shut a single day at 3.53.