Railsbank has signed a deal to buy Wirecard Card Solutions Ltd. in the United Kingdom, the company announced Thursday (Sept. 10).
The Newcastle, England-based FinTech has signed an agreement to buy the U.K. subsidiary of Wirecard, the German payments company that collapsed amid scandal.
Financial terms were not disclosed.
Under the deal, Railsbank will acquire Wirecard’s card technology, clients and some employees.
“This is a huge step forward for everyone,” said Nigel Verdon, co-founder and CEO of Railsbank, in a statement. “Our goal is to provide a safe haven and to deliver an uninterrupted service for the [program] managers and the cardholders. We have already successfully migrated a number of clients and have everything in place for a phased and controlled migration at scale.”
Once valued at $28 billion, parent company Wirecard AG filed for insolvency in June in a Munich court following an auditor’s disclosure that $2.1 billion of supposed deposits were missing from two banks in the Philippines. The company reported it had debts of more than $4 billion.
The company is facing a series of investigations by law enforcement in Munich, Singapore, the United Kingdom and the European Union.
In a cost-cutting move last month, Wirecard reportedly planned to terminate many of its 1,500 employees worldwide. Michael Jaffé, the company’s court-appointed insolvency administrator, told sources the company will lay off hundreds of workers while others plan to resign, Bloomberg reported.
Thomas Jennings, managing director of Wirecard Card Solutions Ltd., said its priority has always been to ensure that customers, management and employees have a seamless transition to a new provider.
“We are confident that entering into the agreement with Railsbank today is a significant step towards that,” Jennings said in a statement. “We continue to pursue our plan for a solvent wind-down of the business.”
Last month, Jaffé said an agreement had been reached to sell Wirecard’s Brazilian business to Sao Paulo-based PagSeguro Digital, one of the nation’s largest mobile payment-based eCommerce companies.
“It is particularly pleasing that the sale of Wirecard Brazil has been the first success with respect to the sale of assets, because the framework conditions of the Wirecard insolvency proceedings have been, and still are, very difficult,” Jaffé said in a statement at the time.