BaFin Tightens Oversight of N26, Bans New Dutch Mortgages

Germany’s financial regulator BaFin on Monday imposed a new set of supervisory measures on online bank N26, appointing a special monitor to oversee remediation and restricting the bank’s expansion in the Netherlands, including an explicit ban on offering new mortgage products in that market. The action follows a 2024 special audit that BaFin says uncovered serious deficiencies in risk management, complaint handling and the organization of the lending business, which the regulator determined amounted to breaches of the German Banking Act.

BaFin’s decision marks at least the second time it has placed a special monitor at N26 since 2021, underlining a prolonged supervisory relationship that has at times included growth constraints. The regulator described the shortcomings identified in the audit as particularly serious, and said the measures announced on Dec. 15 are intended to protect customers and ensure that the bank puts its risk and governance systems on a sound footing.

N26 acknowledged the BaFin action and stressed cooperation with authorities while referring to the appointed monitor. The bank said it was “in close and constructive communication with the supervisory authorities as well as the appointed special representative.” The bank did not dispute the existence of those communications in its public comment.

The sanctions arrive amid significant turnover at the company’s top levels. Cofounder Valentin Stalf is stepping down, leaving cofounder Max Tayenthal as sole chief executive for the moment, and the bank’s chair Marcus Mosen may be appointed interim cochief executive. BaFin in the prior month proposed issuing formal warnings to two members of N26’s management board and signaled it might appoint a special monitor after identifying additional weaknesses in the bank’s risk management.

For N26 the measures have immediate business impact. The ban on new mortgage offerings in the Netherlands curtails a product line that many fintech banks use to diversify revenue and deepen customer relationships in European markets. Restrictions on new business in one of its operating jurisdictions also raise questions about the pace of N26’s international expansion and its ability to attract future funding on favorable terms.

The intervention is also part of a broader regulatory tightening across Europe. Regulators are increasingly focused on governance, operational resilience and consumer protection at digital banks that grew rapidly in recent years. For investors and market participants, BaFin’s action underscores the regulatory risk inherent in banking platforms that operate across borders while centralizing key functions in one national license.

Longer term, the episode could reshape how fintech banks approach lending and complaints handling, and it may prompt more conservative capital and risk frameworks at similar players. Industry observers note that an earlier BaFin cap on N26’s growth in 2021 had constrained the bank’s valuation and coincided with its exit from the U.S. market, and the new measures will likely feed into investor assessments of governance and execution risk.

BaFin has not published the full 2024 audit text alongside Monday’s announcement. Observers will be watching closely for further regulatory guidance on remediation timelines, any extension of restrictions to other product lines or jurisdictions, and formal enforcement actions against individual managers as the monitor engages with N26’s board and executive team.