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Fintech N26 says regulatory action cost it ‘billions’ in lost growth

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Fintech N26 says regulatory action cost it ‘billions’ in lost growth

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Years of regulatory action against German fintech N26 for its poor anti-money laundering controls may have cost the business billions of euros, co-founder Valentin Stalf told the Financial Times, as authorities finally remove a cap on its growth.

Financial regulator BaFin in 2021 ordered online-only bank N26 to limit its new client sign-ups to 50,000 a month, compared with the average 170,000 a month it was taking on at the time. The cap was increased to 60,000 last year and it will be removed from June, according to N26. BaFin declined to comment.

The regulator disclosed last week that it had fined the bank €9.2mn for the persistent late filing of suspicious activity reports in 2022. This followed an earlier fine of €4.25mn in 2021 for similar problems in previous years. An independent monitor that oversees N26’s anti-money laundering controls on behalf of BaFin will remain in place, according to people familiar with the situation.

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N26 said on Tuesday that the direct costs of the saga added up to €100mn, including spending on its control functions and monitoring systems, and the fines. But co-founder Valentin Stalf told the FT that the indirect costs were much higher.

“The impact on N26 surely amounts to billions of euros because it lowered the company’s valuation as we were unable to grow,” he said. In its most recent funding round in 2021 — before BaFin announced it was taking action — N26 was valued at €7.7bn.

Valentin Stalf: ‘The impact on N26 surely amounts to billions of euros because it lowered the company’s valuation as we were unable to grow’ © Noam Galai/Getty Images for TechCrunch

Stalf said he was “pleased about the trust of our regulators” and stressed that the bank’s priorities had changed since 2021, meaning it would not return to its earlier expansion spree.

“Our key priority won’t be growth but profitability of clients and attractiveness of market,” he told the FT, adding that N26 wanted to create “a sustainable portfolio of clients which is profitable in the long run”.

He stressed that the business would “of course” grow from June, but declined to give a specific expansion target.

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Business dynamics were also in its favour he claimed, saying N26 had “very strong demand” for its digital banking services and that “the market has not been carved-up by our competitors over the past two and a half years”.

N26 was on track to become profitable in the second half of this year, he said. Last year, it halved its losses to €100mn and reported a 27 per cent increase in revenues to more than €300mn. This year, it was hoping to increase revenues by up to 35 per cent, according to Stalf.

The business was founded in 2013 and has 8mn customers in 24 European countries, but in the past few years it has pulled back from some of its international expansion plans, exiting the UK, the US and Brazil.

It started out offering current accounts but has recently moved into brokerage services and savings accounts.

Stalf said N26 “did learn a lot over the past two and a half years from the close co-operation with the regulator” and that this experience would be “helpful for our next steps towards an IPO”.

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Big Oil calls on Kamala Harris to come clean on her energy and climate plans

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Big Oil calls on Kamala Harris to come clean on her energy and climate plans

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The US oil industry and Republicans are demanding Kamala Harris clarify her energy and climate policy, as the Democratic candidate tries to please her progressive base without alienating voters in shale areas like Pennsylvania, a crucial swing state.

On Thursday, the vice-president said she no longer supported a ban on fracking, the technology that unleashed the shale revolution. But Harris’s reversal has not quelled attacks from Donald Trump or US executives that she would damage the country’s oil and gas sector.

The heads of the US’s two biggest oil lobby groups said the Democratic candidate must also say whether she would keep or end a pause on federal approvals for new liquefied natural gas plants, and whether she supported curbs on drilling imposed by the Biden administration.

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“Based on what we know of her past positions, the bills that she has sponsored, and her past statements she’s taken a pretty aggressively anti-energy and anti-oil and gas industry stand,” said Anne Bradbury, head of the American Exploration and Production Council.

“These are significant and major policy questions that impact every American family and business, and which voters deserve to understand better when making their choice in November,” she said.

Mike Sommers, chief executive of the American Petroleum Institute, Big Oil’s most powerful lobby group, said Harris should say whether she would stick with Biden administration policies that had unleashed “a regulatory onslaught the likes of which this industry has never seen”.

Trump, the Republican candidate, has accused Harris of plotting a “war on American energy” and has repeatedly blamed her and President Joe Biden for high fuel costs in recent years.

On Thursday, he vowed to scrap Biden administration policies that “distort energy markets”. The former president has called climate change a hoax and his advisers have said he would gut Biden’s signature climate legislation, the Inflation Reduction Act.

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The debate over Harris’s energy policy comes as she and Trump court blue-collar workers in Pennsylvania, a huge shale gas producer that employs 72,000 workers — a potentially decisive voting group in a state Biden won narrowly in 2020.

Harris said in 2019 that she supported a fracking ban but told CNN on Thursday she had ditched that position and the US could have “a thriving clean energy economy without banning fracking”.

US oil and gas production has reached a record high under Biden, even as clean energy capacity has expanded rapidly.

But gas executives in particular have been alarmed at a federal pause on building new LNG export plants, which supply customers from Europe to Asia, saying the policy will stymie further US shale output.

Toby Rice, chief executive of Pennsylvania-based EQT, the US’s largest natural gas producer, said Harris should lift the restrictions, which he argued would compromise energy security.

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“Ignoring her anti-fracking statement four years ago for a second, can we talk about the recent LNG Pause that was put in place this year?”, he said. “This is a policy that has received massive criticism from all sides — our allies, industry and environmental champions . . . a step backwards for climate and American energy security.”

While Biden put climate at the centre of his and Harris’s 2020 White House campaign, Harris has been largely silent, and made only a passing reference to climate change in her speech at the Democratic convention.

“It looks like the Harris campaign has concluded that it’s safer to avoid antagonising producers or climate activists by skirting these issues entirely,” said Kevin Book, managing director of ClearView Energy Partners.

Climate-focused voters are less vexed than energy executives by the lack of explicit policy from Harris.

“Let’s be clear: the most important climate policy right now is defeating Donald Trump in November,” said Cassidy DiPaola of Fossil Free Media, a non-profit organisation. “All the wonky policy details in the world won’t matter if climate deniers control the White House.”

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Last week the political arms of the League of Conservation Voters, Climate Power and the Environmental Defense Fund unveiled a $55mn advertising campaign backing Harris in swing states, focused on economic rather than climate issues.

In contrast, Trump has courted oil bosses who are backing his pledge to slash regulation and scrap clean energy subsidies. His campaign received nearly $14mn from the industry in June, according to OpenSecrets, almost double his oil haul in May.

Additional reporting by Sam Learner

Climate Capital

Where climate change meets business, markets and politics. Explore the FT’s coverage here.

Are you curious about the FT’s environmental sustainability commitments? Find out more about our science-based targets here

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Why the U.S. isn't ready for wars of the future, according to experts

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Why the U.S. isn't ready for wars of the future, according to experts

AI and technology will be at the center of modern warfare, experts say.

Anton Petrus


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Anton Petrus

Earlier this month, former chairman of the Joint Chiefs of Staff, General Mark Milley, and the former CEO of Google, Eric Schmidt, wrote an article for Foreign Affairs arguing that the future of warfare is here.

They say that the U.S. is not ready for it.

Their article opens with Ukraine and describes warfare that features thousands of drones in the sky, as AI helps soldiers with targeting and robots with clearing mines.

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The authors argue technological developments have changed warfare more in the past several years than the decades — spanning from the introduction of the airplane, radio and mechanization to the battlefield. And while this new tech has been used minimally in current conflicts, it is only the beginning.

“Today, what we’re experiencing is the introduction of drones on the ground and drones at sea, and also driven by artificial intelligence and the extraordinary capability that that’s going to bring,” General Milley told NPR.

“Now, it’s not here in full yet, but what we’re seeing are snippets, some movie trailers, if you will, of future warfare. And you’re seeing that play out in Gaza. You’re seeing it play out in Ukraine. You’re seeing it play out elsewhere around the world.”

You’re reading the Consider This newsletter, which unpacks one major news story each day. Subscribe here to get it delivered to your inbox, and listen to more from the Consider This podcast.

Evolution on the battlefield

Schmidt says that this transition is going to happen much quicker than some may expect.

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“Autonomy and abundance are going to transform wars very, very quickly,” he told NPR.

“The only reason it hasn’t happened is, thank goodness, the U.S. is not at war, [but] others are. If you study Ukraine, you see a glimpse of the future. Much of the Kursk invasion that recently happened was due to their ability to use short and mid-range drones to support combined operations on the ground.”

Now that the human element of physically being on a battlefield can be replaced by remote operations, Schmidt argues that this will set a new, more precise method of fighting that would also be dramatically less expensive than traditional methods.

“I’m worried, of course, that this will ultimately set a new standard and actually lower the cost of war. But if you think about it, this technology is going to get invented one way or the other, and I’d like it to get invented under U.S. terms.”

Feeling underprepared

Both Milley and Schmidt say that even if major efforts are made to address this change, the red tape involved with approvals from the Pentagon make it difficult to take quick, effective action.

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“Not even the president of the United States can fix the procurement process of the Pentagon,” Schmidt said.

“The procurement process is designed for weapon systems that take 15 years. In the Ukraine situation, innovation is occurring on a three to six-week timeline, and we need to find a way to get the Pentagon on that tempo. The only way to do that is with other authorities and other approaches, and with an understanding that you don’t design the product at the beginning and then develop it over five years. You do it incrementally, which is how tech works.”

Milley agrees that in order to keep up, entire systems of operating within the military will need to be revolutionized.

“We are in the midst of really fundamental change here. And then from that, you have to have an operational concept. And then from that, you’ve got to identify the attributes of a future force. And then from that, change the procurement system in order to build the technological capabilities, modify the training, develop the leaders, et cetera. Our procurement systems need to be completely overhauled and updated.”

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Donald Trump says he will vote against abortion rights in Florida

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Donald Trump says he will vote against abortion rights in Florida

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Donald Trump said he would vote against an amendment to Florida’s state constitution guaranteeing abortion rights, raising the stakes on an issue that is mobilising Democrats and threatening his White House bid.

The former Republican president had sent mixed signals and avoided taking a stance on the proposed amendment, which will appear on the state ballot in November’s election.

But on Friday, he told Fox News that he would be voting “no” on the measure, which would protect abortion rights until viability and negate a law signed by Republican governor Ron DeSantis in Trump’s home state that bans abortions after six weeks of gestation.

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Trump said that while he disagreed with a six-week ban because “you need more time”, Democrats had “radical” policies on abortion. “It is just a ridiculous situation where you can do an abortion in the ninth month,” he said.

The former president has been caught between the need to maintain the support of staunchly conservative, religious voters who are opposed to abortion, and the political imperative of winning over moderate and independent voters who favour abortion rights.

Trump and other Republicans have been on the defensive over abortion ever since the conservative majority on the Supreme Court, including three justices he appointed during his presidency, overturned the right to an abortion nationally in 2022. That has prompted Republican-controlled state legislatures across the country to pass increasingly strict abortion laws, including the six-week abortion ban in Florida.

Opinion polls consistently show that the majority of Americans oppose such strict measures, and Democrats, including Trump’s rival in the race for the White House, US vice-president Kamala Harris, have relentlessly pounded Trump on abortion rights — and raised concerns that other reproductive practices, including in vitro fertilisation and contraception, could be at risk if he is re-elected.

Earlier this week, Trump had scrambled to say that he would ensure funding for IVF procedures, and on Thursday he had suggested that in Florida he would vote to make sure that abortion was not limited to the first six weeks of pregnancy.

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But that comment triggered a backlash from the right, forcing him to clarify his position opposing the amendment on Friday.

Harris said in a statement that with his comments on Friday to Fox News, Trump had “just made his position on abortion very clear: he will vote to uphold an abortion ban so extreme it applies before many women even know they are pregnant”.

“I trust women to make their own healthcare decisions and believe the government should never come between a woman and her doctor,” Harris added.

Trump’s struggles to define his positions on reproductive rights come after his campaign attacked Harris for changing stances on a number of issues, including healthcare, energy and immigration, in order to appeal to centrist voters.

Trump’s latest comments on abortion came hours before he was set to address a national conference for Moms for Liberty, a conservative women’s group, in Washington. The Florida-based political organisation was formed to protest Covid-19 pandemic mask and vaccine mandates and now advocates to stop public schools from teaching about LGBT+ identities and structural racism, among other issues.

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Tiffany Justice, a co-founder of the group, told the Financial Times earlier on Friday that Trump “really understands and cares about parents and parental rights” and urged anyone who had “an issue” with his stance on abortion to look at the Democratic party’s positions.

“Just wait until you see what the Harris-[Tim] Walz ticket, how anti-life they are,” Justice said. “People need to understand, we need to move our country forward, we need to unite to do that, and if there is anything that we can come together on, it should be our children and their health and safety and development.”

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