German neobank N26 is no longer permitted to lend mortgages in the Netherlands after regulator BaFin found lapses in the firm’s compliance framework.
The order, which also prohibits N26 from securitizing mortgage claims, follows a special audit conducted last year which revealed N26 “lacked proper business organization” and had “serious deficiencies … in risk and complaint management and in the organization of the lending business,” the German financial regulator said Monday.
N26 violated the provisions of the German Banking Act, BaFin said.
This is the second time BaFin has ordered special oversight of N26 since 2021. Issues then involved deficiencies in its anti-money laundering controls, and cost the neobank €4.25 million in BaFin penalties.
Also in 2021, N26 shuttered its U.S. operations. Then-Chief Growth Officer Alex Weber said the firm was “sharpening our strategic focus on our core business in Europe for the time being.” N26 counted 3.7 million “revenue-relevant” customers in 2021; and counts 4.8 million “revenue-relevant” customers in 2025.
As part of Monday’s order, BaFin appointed a special monitor to track N26’s progress in fixing its compliance issues; and imposed additional capital requirements and business restrictions on N26.
Separately, BaFin imposed a €15,000 fine on N26 in March, the regulator said, after the bank failed to inform BaFin that the supervisory board had improperly approved a loan granted to an executive.
A spokesperson for N26 did not immediately respond to a request for comment.
