MUNICH • Former Wirecard chief executive Markus Braun and two other former company officials have been arrested, with prosecutors saying the company knew about huge losses as early as 2015.

The trio conspired to obtain about €3.2 billion (S$5.1 billion) in fraudulent loans, Munich prosecutors said on Wednesday.

Company officials allegedly decided to inflate the books with fake assets to make Wirecard appear more attractive to investors, clients and lenders.

"The suspects knew at least by the end of 2015 that the Wirecard Group was losing money," prosecutors said. "Deceived by faked accounts, banks in Germany and Japan, as well as other investors, granted funds of about €3.2 billion, which are now most likely lost."

Wirecard filed for bankruptcy in June, after acknowledging that €1.9 billion it had listed as assets probably did not exist, deepening its accounting woes.

The company admitted that previous descriptions of its business with third parties, which processed transactions on Wirecard's behalf, were "not correct" after pulling its financial results for last year and the first quarter of this year.

Wirecard declined to comment before the prosecutors' announcement. Mr Braun's lawyer, Mr Alfred Dierlamm, did not reply to calls and an e-mail seeking comment.

The other two suspects detained on Wednesday are former chief financial officer Burkhard Ley and Mr Stephan Freiherr von Erffa.

Prosecutors identified them as "suspect L, CFO until the end of 2017" and "suspect E, the former head of accounting".

Bloomberg was unable to locate lawyers for Mr Ley and Mr von Erffa.

All three are being investigated for fraud, breach of trust, forging accounts and market manipulation.

A Munich court on Wednesday ruled that they had to stay in custody, according to the statement.

Shares of the firm, which were worth more than Deutsche Bank's only a few months ago, fell as much as 5.2 per cent before recovering.

Wednesday's arrests are not the first in the case and will likely not be the last.

Prosecutors openly lobbied at a press conference for witnesses to come forward, pointing out that suspects who cooperate are eligible for "considerable leniency".

"But it's also true that the value of any information continues to drop as our investigations proceed," prosecutor Anne Leiding said.

The aggressive approach is in sharp contrast to how prosecutors treated Wirecard before it owned up to its accounting problems.

In previous years, prosecutors said that they would investigate short-sellers and even the media in the face of negative reports about the company's finances.

"In our questioning, we learnt that there was a strict hierarchical system, characterised by an esprit de corps and pledges of allegiance to the then CEO," Ms Leiding said.

Mr Braun had already been detained last month, but was released on bail a day later.

Earlier this month, investigators arrested Mr Oliver Bellenhaus, former managing director of a Dubai-based Wirecard unit, who is cooperating with the case.

Prosecutors on Wednesday said their new findings and the arrests were based in part on information provided by a "crown witness".

Former chief operating officer Jan Marsalek, who was fired last month after Wirecard disclosed about four-fifths of its net cash was missing from its balance sheet, is still at large.

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