German challenger bank N26 will close 200,000 UK current accounts in April ‘due to Brexit’ – despite launching two years after the EU referendum
- More than 200,000 UK customers will have their accounts closed on 15 April
- The bank said it would ‘no longer be able to operate in the UK after Brexit’
- This is due to its European banking licence
- It said it was not viable for it to apply for a UK one, with some asking whether it’s because it didn’t line up enough customers
German digital challenger bank N26 will close the accounts of its 200,000 UK users on 15 April
Nearly a quarter of a million customers of German digital challenger bank N26 will have their accounts closed in April after it announced it will be exiting Britain, pinning it on Brexit.
However, the bank launched in Britain in October 2018, just five months before the UK was originally due to leave the EU.
Industry insiders have questioned whether it is closing here because the bank had failed to attract enough customers.
The Berlin-based start-up has had a banking licence from the European Central Bank since July 2016, but not a British one from the Bank of England.
When asked on social media platform whether it could apply for a British banking licence, N26 said it was not a ‘viable’ option ‘as a business’.
In a statement, it said the ‘timings and framework outlined in the withdrawal agreement mean that the company will no longer be able to operate in the UK with its European banking licence’.
That suggests that N26 was banking on Brexit not happening.
The excuse has been roundly mocked. One user responded to a statement posted on Twitter: ‘This is a rubbish excuse; we were already going through Brexit when N26 launched here.
‘N26 just failed the UK market spectacularly and is now blaming Brexit on its withdrawal’.
Another said: ‘Sounds like you failed in the UK and are looking for an excuse’.
Sarah Kocianski, head of research at fintech consultancy 11:FS, wrote on Twitter: ‘No-one in the industry is really surprised by this.
‘Why bother getting, and maintaining a licence (along with regulatory capital) in a market where you face stiff competition, when you could go many other places where you don’t?’
N26 denied the move was due to poor performance or capital requirements needed to obtain a UK banking licence, claiming that it was unviable due to the cost and time constraints needed to obtain one before the end of the year.
N26 accounted for around 10% of the UK’s digital banking market a year on from its launch
All UK N26 accounts will be closed on 15 April. The bank said until that date accounts will work as normal, including all card payments and direct debits.
Customers will be asked to transfer deposits in their N26 accounts into an alternative bank account, while it said it will handle ‘all other aspects of account closure on customers’ behalf’.
Money in N26 accounts is protected up to €100,000 under the European deposit protection scheme, which works out at just over £84,000 at the moment.
This is only slightly less than the £85,000 protected by the UK’s Financial Services Compensation Scheme.
The German bank has more than 5million worldwide users, but accounted for just 10 per cent of the digital challenger bank market in Britain last November. It faced a tough battle for customers against other digital banks like Monzo, Revolut and Starling.
Both Monzo and Starling have UK banking licences, while Revolut, like N26, is licensed by the European Central Bank.
N26 offered a free current account, a £4.90 ‘You’ option and an account with a metal debit card which came with a £14.90 monthly fee.
Those with accounts with monthly fees will no longer be charged from 14 March, meaning they get the last month before their account closes for free.
One user asked on Twitter: ‘Can I cancel my metal registration now if it’s less than a year old?
‘Seems pretty mean of you to force me to pay £15 a month into an account that I have no plans on using before you close it.’
THIS IS MONEY’S FIVE OF THE BEST CURRENT ACCOUNTS
Santander’s 123 Lite Account will pay up to 3% cashback on household bills. There is a £1 monthly fee and you must log in to mobile or online banking regularly, deposit £500 per month and hold two direct debits to qualify.
NatWest’s Reward Silver Account offers a £175 switching incentive to new and existing customers as well as insurance cover for European travel. Customers can also earn rewards which can be redeemed as cash or gift cards.
Club Lloyds’s Current Account offers benefits such as cinema tickets, magazine subscriptions and dining cards to current account holders. There is no cost if you pay £1,500 each month, otherwise a £3 fee applies. Must hold two direct debits to earn monthly credit interest.
HSBC’s Advance Account offers £175 cash if you switch to it. The account comes with a £1,000 starting overdraft and 2.75% regular saver account. There is no monthly fee, however you must deposit £1,750 per month into the account.
Nationwide’s FlexDirect account comes with 5% interest on up to £2,500 – the highest interest rate on any current account – if you pay in at least £1,000 each month, plus a fee-free overdraft. Both perks last for a year.
