Worldline backed by investor Bpifrance as tighter board oversight looms

By Gianluca Lo Nostro and Mathieu Rosemain

(Reuters) -Worldline investor Bpifrance backs the payments group's position on risk management but expects greater board-level oversight, an executive director said on Thursday after fraud allegations cut 500 million euros ($586.3 million) from its market value.

A group of 21 European media outlets on Wednesday alleged Worldline continued doing business with merchants German regulator BaFin had banned its German subsidiary Payone from working with in 2023 for failing to comply with anti-money laundering and anti-fraud requirements. 

In response to the reports, the French company said that since 2023 it had strengthened merchant risk controls and terminated non-compliant client relationships.

Jose Gonzalo, executive director at France's state-owned investment bank Bpifrance, which owns about a 5% stake in Worldline, said it agreed with company's statement.

"Now we're going to have even more in-depth discussions on the board about these controls," he said. "CEO (Pierre-Antoine) Vacheron is going to have to tell us everything has been put in place so that we can be completely reassured."

Gonzalo said Bpifrance, which has as part of its wider role stepped in to support some of France's strategic companies in times of need, planned to remain invested in Worldline.

"We're going to stay here for a good while longer, so that we can get back to a value that reflects the value of the company," he said.

Worldline shares, which fell 38% in their second-biggest one-day loss since October 2023 on Wednesday, recovered some of their losses in early trade on Thursday. By 0946 GMT they were up 7.5% to 3.04 euros, after rising as much as 14.3% earlier.

The Paris-based firm, once valued at over 20 billion euros ($23.4 billion), has been grappling with waning consumer sentiment and contract terminations that have led to repeated cuts to its financial outlook.

Newly appointed CEO Vacheron said on Wednesday that, since 2023, it had embarked upon "a rigorous process to identify merchants whose practices did not align with our updated standard" under close regulatory oversight, particularly in Germany.

"We are making good progress on repositioning the company and putting it back on track for robust cash generation," he told analysts in a call after the market closed.

Investors will want to see proof of stabilisation before buying back into the stock, JPMorgan analysts said in a note.

"We still see a risk that today’s negative news articles will have a detrimental effect on the business, hampering efforts to stabilize Worldline and return the business to cash-generating growth," they said.

($1 = 0.8549 euros)

(Reporting by Gianluca Lo Nostro; Editing by Matt Scuffham and Jan Harvey)