German regulator orders oversight, limits on online bank N26

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Home > Finance > German regulator orders oversight, limits on online bank N26

Finance

German regulator orders oversight, limits on online bank N26

Published by Global Banking and Finance Review

Posted on December 15, 2025

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Tags:compliance customers management financial stability regulatory framework

By Tom ‌Sims

FRANKFURT, Dec 15 (Reuters) - Germany's financial regulator BaFin on Monday announced stricter oversight of ‍Berlin-based online ‌bank N26, including limits on new business in the Netherlands and the instalment of a ⁠special monitor, after finding lapses in ‌compliance by the lender.

The measures mark the second time since 2021 that BaFin has ordered a special monitor to oversee the fast-growing Berlin-based bank, and they amount to a significant crackdown on a prominent ⁠name in finance in Europe's largest economy.

The lender, one of Europe's most valuable financial startups, has seen tumultuous times in recent months, with an array of management and supervisory ‌board changes.

N26 said that it was "in close ⁠and constructive communication with the supervisory authorities as well as the appointed special representative".

Among the orders announced on Monday, BaFin prohibited N26 from offering new mortgages in the Netherlands and required the bank to hold more capital.

BaFin said that a special audit in 2024 revealed issues.

"There were serious deficiencies, particularly in risk and complaint management and in the organization of the lending business. The institution thus violated the provisions of the German Banking Act," ‍BaFin said.

N26, founded in 2013, says it has 5 million customers in 24 countries in Europe. It has raised nearly $1.8 billion from investors, including insurer Allianz, Singapore's sovereign wealth fund GIC, Chinese internet group Tencent, venture capital firm Earlybird and Silicon Valley investor Peter Thiel.

In August, one of the original founders, Valentin Stalf, said he would step down as co-CEO and join the supervisory board. A ⁠new chief risk officer was also appointed starting on December 1.

The bank this year doubled the size of its supervisory board to six, installing a new chair who once sat on the board of Germany's central bank.

N26 ran into regulatory problems in 2021, when it was fined by BaFin for lapses in money-laundering controls and ordered to limit the number of customers ‌it takes on to 50,000 a month.

At the time, N26 said it would close its U.S. operations and focus on Europe.

(Reporting by Tom Sims; Editing by Miranda Murray and Susan Fenton)

Frequently Asked Questions about German regulator orders oversight, limits on online bank N26

1What is BaFin?

BaFin, or the Federal Financial Supervisory Authority, is Germany's financial regulatory authority responsible for overseeing banks, financial institutions, and insurance companies to ensure compliance with financial laws.

2What is compliance in banking?

Compliance in banking refers to the adherence to laws, regulations, and guidelines set by regulatory bodies to ensure the integrity and security of financial operations.

3What is risk management?

Risk management in finance involves identifying, assessing, and prioritizing risks followed by coordinated efforts to minimize, monitor, and control the probability or impact of unfortunate events.

4What is a special monitor in banking?

A special monitor is an appointed individual or entity tasked with overseeing a financial institution's compliance with regulations and internal policies, especially during periods of regulatory scrutiny.

5What is a mortgage?

A mortgage is a loan specifically used to purchase real estate, where the property itself serves as collateral for the loan.