“Bank N26, Groupe Immobilier Adler, Germany excites the world! » Edited by Charles SANNAT

My dear daring ones, my dear daring ones,

The pandemic has a good back and allows you to forget about many things, ups and downs and other scandals. When not a pandemic, but a war in Ukraine keeps people busy. If by chance nothing else happens, the daily flow of information, even more insignificant than the other, is more than enough to make it possible to forget the main thing, taking up the time available to the brain.

It is for these reasons that it is very important sometimes to take the time to put things into perspective. Recall some past events in order to better understand those that will happen very soon.

So let’s turn to Germany, which is so praised for its current economic success.

Remember the Wirecard scandal.

The Wirecard scandal stems from the bankruptcy of the German company Wirecard in a possible accounting fraud of almost 2 billion euros. This case was called “German Enron”. In addition to Wirecard’s management team, this bankruptcy affects financial auditor Ernst & Young and the Federal Financial Supervisory Authority, the body responsible for regulating and supervising the financial sector in Germany.

Founded in 1999, Wirecard is a German startup that offers security solutions for online payments. He joined DAX in Frankfurt in 2018. While the company has shown significant growth over its lifetime (reaching 300,000 corporate customers in June 2020), rumors and questions about Wirecard’s business model and possible violations have nevertheless been regularly repeated by the press.

The case erupted in June 2020 when the company admitted that €1.9 billion of its balance sheet (nearly a quarter of its book value) probably did not actually exist.

At the political level, German Finance Minister Olaf Scholz speaks of a “scandal unparalleled in the financial world” and enforces increased scrutiny in the electronic payments sector. The minister also announced a plan to reform BaFin, the body responsible for financial oversight of companies in Germany.

N26 worries, from the US, where it ceased operations, to Italy via Germany.

The original name of the bank (Number26) refers to the number of small cubes that make up the Rubik’s Cube.

Since its inception in February 2013 in Berlin, Germany, Number26 has partnered with Wirecard bank (and we find the same ones!!) located in Munich and holding a banking license. This partnership allowed him to issue bank cards until 2016, when he received his own European banking license. He is known on the occasion of N26.

December 3, 2015 N26 opens up access to six new European markets, including France.

Berlin neobank seeks over $7M in 2021 and is starting to hit the headlines.

In the US, N26 had to cease operations and close the accounts of 500,000 of its customers at the end of 2021.

In Italy, the Bank of Italy forbade him to open new accounts and continue his development.

In France, there are hundreds of customers who simply complain about their accounts being closed and the inability to access their money left hanging in the bank.

As for the directors of the bank, as confirmed by this Reuters report in February (source here) “Four managers of the German online bank N26 are under investigation by prosecutors on suspicion of fraudulent customer accounts, the Handelsblatt newspaper reported on Friday. According to Handelblatt, the criminals are believed to have set up numerous accounts, for example to operate fake online stores or launder money, and customers have complained that claimed accounts were not blocked in a timely manner. An N26 spokesman said the bank had no information about ongoing investigations. »

Personally, I have a free and very practical N26 account for my daily operations with an application that works very well on your smartphone, but above all, do not leave too large amounts there, as was the case with Alexis, our 27-year-old engineer and he was blocked for 23,000 euros.

Neobanks, N26, like everyone else, usually lose money every year, they are not necessarily very strong and not necessarily very structured. They are more like start-up mode companies, ideal for rapid growth but often a disastrous model for learning to manage risk. Therefore, do not exceed 2,000 euros in assets in this type of institution.

But that’s not all, a huge real estate group

ADLER Real Estate. KPMG refuses to certify accounts of one of Germany’s largest real estate groups crashing on the stock market

Just two years after the Wirecard scandal in Germany, is the country once again on the brink of another accounting fraud?

The Adler Real Estate Group has been targeted by short sellers since this fall, including the now-famous Fraser Perring, who has won big in the Wirecard, Steinhoff and Grenke scandals. He and others suspect the property owner of falsifying his accounts. On Saturday, Adler published its financial results for 2021, which show that the group, one of the largest in the sector in Germany, suffered a loss of 1.24 billion euros last year… Finally, according to its own statements. The stock exchange fears the reality is far worse as Adler’s auditor, KPMG, has refused to certify the accounts.

In October last year, Viceroy Research, owned by the short seller, said “Adler Group’s balance sheet has been largely artificially inflated. Claims that KPMG didn’t fully debunk when the firm recently released its findings. Weaknesses in compliance and governance were found, but no systematic fraud was found.

In the stock market, Adler is down another 46% today, its shares falling to a new all-time low of €3.88 (-65% YTD, after -63% in 2021, -92% from the summer 2018 record). . »

Adler’s board resigned over the weekend

Germany will enter a losing streak.

With Germany still outperforming the US economy, its reliance on Russian gas, its bloated industry, the speculation of some of its companies, and the complacency of its regulators could well lead to difficult and uncomfortable times for our German neighbors.

It’s too late, but all is not lost.

Get ready!

Charles SANNAT

“Insolentiae” is Latin for “insolence”.
Email me charles@insolentiae.com
To write to my wife helene@insolentiae.com

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