The chief executive of a prominent German digital bank will be stepping down to join the supervisory board, following underlying tensions between the bank’s investors and its founders. This shift comes amid growing scrutiny from Germany’s financial regulator, BaFin, which recently expressed concerns about the bank’s operations and may impose additional sanctions.
Reports suggest that the transition is linked to ongoing negotiations involving the bank’s founders and investors. The co-founders reportedly hold about 20% ownership of the bank and are contemplating relinquishing specific voting rights that currently grant them veto power over significant company decisions. In exchange for this concession, investors are expected to agree to lower returns on their investments.
Notably, the bank was valued at €7.7 billion in 2021, and its recent fundraising efforts promised investors a guaranteed 25% annualized rate of return.
As for leadership changes, the bank’s other co-founder, who shares the executive role, is anticipated to retain his position for the time being. However, sources indicate that he might face similar scrutiny and could potentially resign in the future. The current chairman is being considered as a possible interim replacement if leadership changes do occur, while the other co-founder remains publicly committed to fulfilling his duties.
In Germany, the corporate governance structure operates on a two-tier system, where management boards handle daily operations, and supervisory boards focus on strategic oversight, compensation, and executive appointments. The departing executive stated that he had been planning this change for an extended period and would gradually transition over the next six months, emphasizing that his upcoming supervisory role would be markedly different from his current responsibilities.
This decision gained momentum following reports that highlighted potential leadership transitions within the bank, underscoring the challenging dynamics between its leadership and investors.