Connect with us

News

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

Published

on

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

Unlock the Editor’s Digest for free

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.

Advertisement

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.

Advertisement

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”.

Advertisement

News

Top Drug Regulator Is Fired From the F.D.A.

Published

on

Top Drug Regulator Is Fired From the F.D.A.

Dr. Tracy Beth Hoeg, the Food and Drug Administration’s top drug regulator, said she was fired from the agency Friday after she declined to resign.

She said she did not know who had ordered her firing or why, nor whether Health Secretary Robert F. Kennedy Jr. knew of her fate. The Department of Health and Human Services did not immediately respond to a request for comment.

The departure reflected the upheaval at the F.D.A., days after the resignation of Dr. Marty Makary, the agency commissioner. Dr. Makary had become a lightning rod for critics of the agency’s decisions to reject applications for rare disease drugs and to delay a report meant to supply damaging evidence about the abortion drug mifepristone. He also spent months before his departure pushing back on the White House’s requests for him to approve more flavored vapes, the reason he ultimately cited for leaving.

Dr. Hoeg’s hiring had startled public health leaders who were familiar with her track record as a vaccine skeptic, and she played a leading role in some of the agency’s most divisive efforts during her tenure. She worked on a report that purportedly linked the deaths of children and young adults to Covid vaccines, a dossier the agency has not released publicly. She was also the co-author of a document describing Mr. Kennedy’s decision to pare the recommendations for 17 childhood vaccines down to 11.

But in an interview on Friday, Dr. Hoeg said she “stuck with the science.”

Advertisement

“I am incredibly proud of the work we were doing,” Dr. Hoeg said, adding, “I’m glad that we didn’t give in to any pressures to approve drugs when it wasn’t appropriate.”

As the director of the agency’s Center for Drug Evaluation and Research, she was a political appointee in a role that had been previously occupied by career officials. An epidemiologist who was trained in the United States and Denmark, she worked on efforts to analyze drug safety and on a panel to discuss the use of serotonin reuptake inhibitors, the most widely prescribed class of antidepressants, during pregnancy. She also worked on efforts to reduce animal testing and was the agency’s liaison to an influential vaccine committee.

She made sure that her teams approved drugs only when the risk-benefit balance was favorable, she said.

The firing worsens the leadership vacuum at the F.D.A. and other agencies, with temporary leaders filling the role of commissioner, food chief and the head of the biologics center, which oversees vaccines and gene therapies. The roles of surgeon general and director of the Centers for Disease Control and Prevention are also unfilled.

Advertisement
Continue Reading

News

Supreme Court is death knell for Virginia’s Democratic-friendly congressional maps

Published

on

Supreme Court is death knell for Virginia’s Democratic-friendly congressional maps

The U.S. Supreme Court

Andrew Harnik/Getty Images


hide caption

toggle caption

Advertisement

Andrew Harnik/Getty Images

The U.S. Supreme Court refused Friday to allow Virginia to use a new congressional map that favored Democrats in all but one of the state’s U.S. House seats. The map was a key part of Democrats’ effort to counter the Republican redistricting wave set off by President Trump.

The new map was drawn by Democrats and approved by Virginia voters in an April referendum. But on May 8, the Supreme Court of Virginia in a 4-to-3 vote declared the referendum, and by extension the new map, null and void because lawmakers failed to follow the proper procedures to get the issue on the ballot, violating the state constitution.

Virginia Democrats and the state’s attorney general then appealed to the U.S. Supreme Court, seeking to put into effect the map approved by the voters, which yields four more likely Democratic congressional seats. In their emergency application, they argued the Virginia Supreme Court was “deeply mistaken” in its decision on “critical issues of federal law with profound practical importance to the Nation.” Further, they asserted the decision “overrode the will of the people” by ordering Virginia to “conduct its election with the congressional districts that the people rejected.”

Advertisement

Republican legislators countered that it would be improper for the U.S. Supreme Court to wade into a purely state law controversy — especially since the Democrats had not raised any federal claims in the lower court.

Ultimately, the U.S. Supreme Court sided with Republicans without explanation leaving in place the state court ruling that voided the Democratic-friendly maps.

The court’s decision not to intervene was its latest in emergency requests for intervention on redistricting issues. In December, the high court OK’d Texas using a gerrymandered map that could help the GOP win five more seats in the U.S. House. In February, the court allowed California to use a voter-approved, Democratic-friendly map, adopted to offset Texas’s map. Then in March, the U.S. Supreme Court blocked the redrawing of a New York map expected to flip a Republican congressional district Democratic.

And perhaps most importantly, in April, the high court ruled that a Louisiana congressional map was a racial gerrymander and must be redrawn. That decision immediately set off a flurry of redistricting efforts, particularly in the South, where Republican legislators immediately began redrawing congressional maps to eliminate long established majority Black and Hispanic districts.

Advertisement
Continue Reading

News

Explosion at Lumber Mill in Searsmont, Maine, Draws Large Emergency Response

Published

on

Explosion at Lumber Mill in Searsmont, Maine, Draws Large Emergency Response

An explosion and fire drew a large emergency response on Friday to a lumber mill in the Midcoast region of Maine, officials said.

The State Police and fire marshal’s investigators responded to Robbins Lumber in Searsmont, about 72 miles northeast of Portland, said Shannon Moss, a spokeswoman for the Maine Department of Public Safety.

Mike Larrivee, the director of the Waldo County Regional Communications Center, said the number of victims was unknown, cautioning that “the information we’re getting from the scene is very vague.”

“We’ve sent every resource in the county to that area, plus surrounding counties,” he said.

Footage from the scene shared by WABI-TV showed flames burning through the roof of a large structure as heavy, dark smoke billowed skyward.

Advertisement

The Associated Press reported that at least five people were injured, and that county officials were considering the incident a “mass casualty event.”

Catherine Robbins-Halsted, an owner and vice president at Robbins Lumber, told reporters at the scene that all of the company’s employees had been accounted for.

Gov. Janet T. Mills of Maine said on social media that she had been briefed on the situation and urged people to avoid the area.

“I ask Maine people to join me in keeping all those affected in their thoughts,” she said.

Representative Jared Golden, Democrat of Maine, said on social media that he was aware of the fire and explosion.

Advertisement

“As my team and I seek out more information, I am praying for the safety and well-being of first responders and everyone else on-site,” he said.

This is a developing story. Check back for updates.

Continue Reading
Advertisement

Trending