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German digital bank N26 pulls out of UK, blaming Brexit

Kalyeena Makortoff Banking correspondent
Photograph: Dado Ruvić/Reuters

The German digital bank N26 is has blamed Brexit for its decision to pull out of the UK and close more than 200,000 customer accounts.

The lender has given customers less than two months to move their money, with all UK accounts to be closed by 15 April. It has also stopped offering new accounts to UK residents.

The move comes less than 18 months after the Berlin-based firm launched in the UK. It had about a dozen employees in the UK, with the rest of the business run remotely from the German capital.

The “challenger bank”, which has attracted investors including the US and Hong Kong billionaires Peter Thiel and Li Ka-shing, and the Chinese tech giant Tencent, blamed Brexit for its decision to leave the UK.

“The timings and framework outlined in the EU withdrawal agreement mean that the company will in due course be unable to operate in the UK with its European banking licence.”

As recently as October, N26 was publishing blogposts assuring customers that it would continue in the UK after Brexit. Those posts have since been deleted.

The bank – which has 5 million customers in the EU – was relying on passporting rights that allowed it to use its German licence to operate in the UK. It originally planned to take advantage of the British regulator’s temporary permissions regime to continue operating in the country after Brexit. Those rules allow EU financial services firms to continue operating after the transition period ending on 31 December 2020, giving them three years to apply for a formal licence.

However, the Guardian understands the company changed its mind as it believed the costs were starting to outweigh the benefits of staying in the UK market.

John Cronin, a financial analyst at the stockbroker Goodbody, said: “It’s quite a competitive market. N26 certainly made some inroads from a savings perspective. But the challenge is on the other side of the balance sheet in terms of monetising deposits.”

As part of the announcement to leave the UK market, Will Sorby, the general manager of N26 UK, said: “We would like to thank all N26 customers for their support. We’ve planned the next steps carefully to ensure this process is as smooth as possible for every customer in the UK.”