Erscheinung:09.11.2021 | Topic Risk management N26 Bank GmbH: BaFin orders measures to limit growth and appoints a special commissioner
On 5 October 2021, the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin) ordered N26 Bank GmbH to take measures to ensure the institution once again has in place a proper business organisation and to mitigate risks to the institution’s operational resilience. A special commissioner appointed by BaFin will monitor implementation of the measures ordered.
Specifically, BaFin has ordered measures to remedy shortcomings in risk management with regard to IT and outsourcing management. The institution must implement these measures within a set time limit.
The shortcomings in risk management are due to the bank’s substantial growth. In accordance with section 45b (1) sentence 1 of the German Banking Act (Kreditwesengesetz – KWG), BaFin has ordered risk mitigation measures that place limits on customer growth and on certain risk exposures. Customer acquisition is to be substantially reduced with N26 Bank GmbH only permitted to acquire a maximum of 50,000 new customers per month. In addition, the value of exposures secured by mortgages on immovable property may not exceed €500,000,000. This limitation is applicable in all countries in which N26 Bank GmbH operates.
In order to monitor implementation of the measures ordered, BaFin has appointed a special commissioner under section 45c (1) in conjunction with subsection (2) of the KWG. The special commissioner is to keep BaFin informed about the progress of the implementation.
Depending on the progress made in remedying the shortcomings, the measures to mitigate risks may be adjusted gradually following an assessment by BaFin and in consultation with the special commissioner.
The order is issued on the basis of section 25a (2) sentence 2, section 44 (1) sentence 1, section 45b (1) sentence 1 and section 45c (1) sentence 1 and subsection (2) no. 6 of the KWG. Publication of this order is based on section 60b of the KWG.
The order has been final and binding since 6 November 2021.
This order should also be considered in relation to the order issued by BaFin on 11 May 2021 to rectify deficiencies related to the prevention of money laundering and terrorist financing. The limitations placed on N26 Bank GmbH’s growth will allow the institution to direct more of its resources towards strengthening customer identification processes, transaction monitoring and suspicious transaction reporting. In a notice dated 25 June 2021, BaFin imposed an administrative fine of €4,250,000 on the bank due to the delayed submission of a high number of suspicious transaction reports.
