MUNICH/MANILA (REUTERS) - Wirecard's US$2.1 billion (S$2.9 billion) accounting scandal is being investigated by the Philippines, which said that the German payments firm's former chief operating officer Jan Marsalek may be in the country.

Philippine Justice Secretary Menardo Guevarra said on Wednesday (June 24) that he had instructed state investigators to coordinate with the central bank's anti-money laundering council in investigating Wirecard.

Mr Marsalek was fired by Wirecard on Monday after it disclosed that the billions, purportedly held at two Philippine banks which have denied any connection with the German firm, probably did not exist.

"There are some indications that he may have returned recently and may still be here," Mr Guevarra said in a text message to reporters, adding that immigration records showed the 40-year-old Austrian had been in the Philippines from March 3 to 5.

The Munich prosecutor's office intends to seek Mr Marsalek's arrest, German business daily newspaper Handelsblatt reported.

Germany has no extradition treaty with the Philippines.

The Munich prosecutor's office declined to comment, as did the court that would need to approve any arrest warrant.

Mr Marsalek's lawyer could not be reached for comment.

Former chief executive Markus Braun, who was arrested in Munich on Monday on suspicion of misrepresenting Wirecard's accounts and of market manipulation, was released on Tuesday after posting bail of €5 million (S$7.8 million).

Although a warrant against Mr Braun - another Austrian - has been lifted, he remains under investigation. Mr Braun's lawyer Alfred Dierlamm declined to comment.

'CLARITY UNLIKELY'

During Mr Braun's 18 years as chief executive, Wirecard grew into a US$28 billion "fintech" firm that won a spot in 2018 in Germany's DAX blue-chip index.

It fell from grace last Thursday when auditor EY refused to sign its 2019 accounts.

Mr Braun said Wirecard may have been a victim of fraud before he quit last Friday.

The ensuing scandal has rocked Germany's financial establishment, shown regulators to have been asleep at the wheel, and sent Wirecard shares down by more than 80 per cent, to value the business at around US$2 billion.

Bank of America Merrill Lynch slashed its share-price target to €1 from €14 on Wednesday, saying customers may be starting to abandon Wirecard, while banks it owes €1.75 billion to may be weighing the closure of credit lines.

"These developments may make the business unsustainable," its analysts wrote in a note. "Clarity on the underlying business is unlikely to arise for some time."

South-east Asian ride-hailing and payments company Grab said it had put a partnership with Wirecard on hold.

The alliance, which is backed by Softbank, was part of a broader pact with the Japanese investor that put money into Wirecard last year.

CRISIS MANAGER

New chief executive officer James Freis, a former financial investigator at the US Treasury and compliance chief at the Frankfurt Stock Exchange, is holding crisis talks with a consortium of 15 banks led by Germany's Commerzbank.

With Wirecard having failed to file audited financials, the banks could call in the loans at any time.

Some creditors do not, for now, favour tipping Wirecard into insolvency, but they are demanding full transparency as they seek to get their money back, people close to the matter said.

With the disclosure of the financial hole wiping out a decade of cash flows, it will be tough for Wirecard to survive even with a debt restructuring as underlying profitability could be weak, said Mr Richard Sbaschnig, a forensic accountant at CFRA.

Wirecard's potential break-up value is likely to be limited, Mr Sbaschnig added, as earnings appear to have been negative in 2018 after stripping out the impact of the obscure third-party acquiring partners at the centre of the suspected fraud.

German financial regulator Bafin, which has filed a revised claim against Wirecard to prosecutors, has parachuted in an official to stabilise its Wirecard Bank subsidiary.

Wirecard Bank holds €2.2 billion, according to the most recent figures, on behalf of depositors whose claims would senior those of bank lenders to the parent company.