Scandal-hit Wirecard to exit DAX index with Delivery Hero standing by

Wirecard's successor will be announced on Aug 19 with all changes taking effect from August 24. PHOTO: REUTERS

FRANKFURT (BLOOMBERG) - Deutsche Boerse will remove Wirecard from its benchmark DAX index ahead of a regular quarterly review following the collapse of the payments company amid allegations of accounting fraud.

The decision was taken following consultations with market participants conducted after Wirecard declared insolvency in June. The results favored immediate removal of bankrupt companies from the index, rather than waiting for the review.

Delivery Hero is seen as the most likely candidate to take the spot among Germany's most valuable companies, according to the latest index ranking list.

"According to the new rules, insolvent companies shall be removed from the DAX Selection Indices with two trading days' notice," Deutsche Boerse said in a statement late Wednesday (Aug 12). Wirecard's successor will be announced on Aug 19, with the changes taking effect from Aug 24.

Delivery Hero's stock hit a record high in July as virus-induced lockdowns sparked increased demand for its food delivery services. The possibility of the company joining the DAX is seen as controversial among some market participants, as it has yet to report an annual profit. That raises questions about the suitability and sustainability of including it alongside heavyweights such as Siemens and SAP.

Irrespective of the current change in the rules for dealing with insolvent companies, an in-depth review of the DAX rules will be conducted, Deutsche Boerse said. For this purpose, another extensive market consultation will be launched, with results expected by the end of the year.

Wirecard filed for insolvency after admitting that €1.9 billion (S$3.1 billion) in previously reported cash didn't exist. The scandal has continued to widen and threatens to engulf top politicians, regulators and auditors.

In the latest twist, German federal police on Wednesday launched a manhunt for Wirecard's former chief operating officer Jan Marsalek. Marsalek was also added to Interpol's wanted list.

Separately, Philippine investigators recommended that two immigration officers be charged for allegedly falsifying Marsalek's travel records.

Immigration records on his supposed arrival and departure on June 23 and 24 respectively were "both spurious" and were made "in order to divert the attention of authorities in Europe to focus attention in the Philippines," the National Bureau of Investigation said.

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