Another setback for the Berlin smartphone bank N26: The financial regulator Bafin is apparently still not satisfied with the bank’s fight against money laundering and has extended “measures to prevent money laundering and terrorist financing”, as Bafin announced on Monday. The decision dates from March, but has only now been published. The main problem for N26: The regulator is sticking to both its special watchdog and a growth limit.
The start-up has been pursuing the issue of money laundering since June 2021. At that time, the Bafin also imposed a fine of millions on N26 and significantly restricted the company’s growth. Since then, a maximum of 50,000 new customers have been allowed to join each month. It is now unclear how long the bank will have to observe this upper limit. Originally, they had hoped that the fintech would be able to shake off the restriction in the first half of the year.
Hard times for N26 and other fintechs
N26 announced that the bank had invested “extensively in preventive measures in the area of money laundering” in recent years and had increased its staff and optimized it technologically. The order recognizes these significant advances and includes a plan to address the outstanding issues. N26 has now fully complied with the order on business organization and risk management, which was also published in 2021. The smartphone bank was founded ten years ago to dig the water out of the established money houses. In fact, today it has around eight million customers in 24 countries. In the meantime, N26 was even worth almost eight billion euros. Recently, however, growth began to falter. There were arguments in the leadership and trouble with the financial regulator.
Also made reports the round, according to which Allianz is allegedly looking for a buyer for its stake in N26. The Munich-based insurance giant is currently sounding out interest in its 5.4 percent stake, which it acquired in two rounds of financing in 2018 and 2019, Reuters news agency wrote, citing the Financial Times. As a result, the Allianz investment subsidiary Allianz X is prepared to accept a valuation of around three billion dollars (2.7 billion euros), which is well below the level of the most recent financing round two years ago. At that time, investors valued N26 at 7.7 billion euros.
Other fintechs are also facing difficult times. In the era of low interest rates, a lot of money flowed into the bank start-ups. However, only some of the young companies were able to really establish themselves. The others are now trying in vain to collect fresh capital for further growth. Since investors have been getting decent interest rates again for less risky government bonds, less money is flowing into young companies.