Investors in N26 are working to remove the German digital bank’s founders as co-CEOs after regulator BaFin identified ongoing risk management issues at the fintech, according to the Financial Times.
Backers are negotiating a deal to have Valentin Stalf step down by September 1, while his fellow founder, Max Tayenthal, would exit by December 31. N26’s supervisory board chair, Marcus Mosen, is set to take over as interim co-CEO.
This move follows a BaFin special audit that revealed “weaknesses in the internal control systems, processes, and overall organization,” as noted in N26’s annual report. The regulator is expected to issue a formal warning to two members of N26’s management board and implement a special monitor.
These regulatory concerns arise a year after BaFin lifted a cap on new customer onboarding that had been imposed in 2021 due to inadequate money laundering controls. Initially set at 50,000 new customers per month, the limit was increased to 60,000 in 2023 but still constrained growth for Germany’s most valuable fintech.
According to the FT, these new issues have led N26 to pause a funding round initiated earlier this year. The company aimed to buy out investors from its 2021 round, who had been promised a 25% annualized return on their investments.
The proposed deal would see Stalf and Tayenthal relinquish their special voting rights in exchange for a reduced return for the investors.