BaFin has told N26 to end new mortgage lending in the Netherlands and imposed new capital requirements after a special audit found “serious deficiencies, particularly in risk and complaint management and in the organisation of the lending business. The institution thus violated the provisions of the German Banking Act.”
The watchdog has also appointed a special monitor to oversee changes, just a year after a previous monitor left the bank. That monitor was put in place after BaFin imposed a cap on how many new customers the bank was allowed to onboard each month because of concerns over lax money laundering controls.
N26 is also on the midst of negotiations over a new shareholder agreement. According to the Financial Times, co-founders Maximilian Tayenthal and Valentin Stalf – who between them hold about 20% of N26’s shares – would forfeit special voting rights that let them veto significant decisions.
In return, the 25% annual returns guaranteed to new investors from a 2021 fundraising round would be reduced.
Stalf has already quit as co-CEO as part of the negotiations, with Tayenthal set to leave the management board by the end of the year with Dargan coming in as the new chief.
A 25-year industry veteran, Dargan was group chief operations and technology officer at UBS. Before that, he serviced as chief information officer for corporate and institutional banking at Standard Chartered Bank in Singapore.
,Says Dargan: “This marks the beginning of something new for me – a new opportunity, a new bank and a refreshed business model. N26 has been a pioneer in digital banking with a strong foundation and a forward-looking strategy, and I’m excited to work with the team to help write the next phase of its journey.”
On the BaFin sanctions, N26 says it is “in close and constructive communication with the supervisory authorities as well as the appointed special representative”.
