Wirecard, a Bavarian start-up specializing in online payments, has nudged German giant Commerzbank AG out of the blue-chip DAX, in the latest sign of plucky financial technology companies outshining traditional lenders.
Frankfurt stock exchange operator Deutsche Boerse made the announcement late on Wednesday as part of its regular review of the composition of the DAX 30, based on the market capitalization and trading volumes of Germany’s top listed firms.
The change is to take effect on Sept. 24.
Photo: AFP
Commerzbank chief executive Martin Zielke said “of course, it is not welcome” that Germany’s second-largest lender and a founding member of the prestigious DAX club three decades ago has to move to the mid-size MDAX.
“But nothing changes for our customers and our business,” he said.
The ailing bank, which had to be rescued by the German state during the financial crisis, has seen its share price plunge by a third since January to give it a market cap of just over 10 billion euros (US$11.5 billion) — the lowest of all DAX 30 players.
Investor darling Wirecard AG, currently listed on the TecDAX, had been widely expected to take Commerzbank’s spot in the reshuffle.
The fintech company that makes software for cashless and contactless payments has seen its share price soar by 110 percent this year.
It has a market cap of more than 23 billion euros, surpassing even flagship lender Deutsche Bank AG, which is valued at about 20.5 billion euros — and was itself axed from the eurozone’s benchmark EuroStoxx 50 on Monday.
Wirecard is now the nation’s third-largest financial group on the German stock market behind insurance behemoths Allianz AG and Munich Re.
Founded in a Munich suburb in 1999 at the height of the dot-com bubble, Wirecard started out processing card payments for gambling and pornography Web sites.
Its rise has been fueled by the boom in e-commerce and surging demand for online transactions, as well as payments made just by holding a credit card or smartphone over a reader, technologies that have shaken up the financial sector and left old-school banks struggling to keep up.
Wirecard’s clients include duty free shops at airports, Air France-KLM, mobile phone operators O2 and Orange, travel firm TUI and supermarket chain Aldi.
In a sign of its global ambitions, Wirecard has clinched partnerships with Chinese mobile payment companies Alipay (支付寶) and WeChat Pay (微信支付), hoping to cash in on the burgeoning market of using apps to pay for goods in real-world shops.
Wirecard CEO Markus Braun said only about 2 percent of transactions around the world today are fully digital, with cash still accounting for the bulk of purchases.
“We want to make payments invisible,” Braun recently told the Frankfurt Allgemeine daily.
“We see this market growing 10-fold, or even 30-fold in the future,” he said.
German Minister of Finance Olaf Scholz last week said the decline of Deutsche and Commerzbank was “a problem” for the nation’s export-reliant companies, as local lenders cannot match the scale or reach of foreign rivals.
How the German banking sector develops from here will depend partly on the ability “of traditional actors to adapt to new technologies,” Bundesbank Vice President Claudia Buch said.
Commerzbank said it remained committed to its turnaround plan, which includes a major push to win new retail banking clients and an ambitious digitalization drive.
“At the moment it is obviously the case that the market values fintechs more highly than traditional banks,” Zielke said in a statement.
“This development shows that our strategy is the right one and spurs us on to push ahead with the transformation into a digital enterprise,” he said.
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