German Authority Restricting the Number of Bank Customers

The state specification of the number of customers and the limitation of the number of customers who – regardless of market demand – are allowed to use certain services, are typical features of a central administration economy in times of financial repression.

On October 5th, 2021, the Federal Financial Supervisory Authority (BaFin) ordered N26 Bank GmbH to take measures to restore proper business organization and to contain risks to operational resilience. A special representative appointed by BaFin will monitor the implementation of the measures ordered.

Specifically, BaFin has ordered the elimination of deficiencies, particularly in risk management in the areas of information technology and outsourcing management. The implementation must take place within a specified period.

The shortcomings in risk management are due to the strong growth of the bank, writes BaFin. In accordance with Section 45b (1) sentence 1 of the German Banking Act (KWG), BaFin has ordered risk minimization measures that limit customer growth and certain risk positions.

The growth in new customers of N26 Bank GmbH will be materially reduced and will be limited to 50,000 new customers per month. In addition, the exposure value on risk positions secured by real estate may not exceed EUR 500,000,000. This limit includes all countries in which N26 Bank GmbH is active.