Solaris, a German fintech and neobank, has a long history of compliance troubles. Moreover, its ongoing financial losses and regulatory woes doubt its long-term profitability, even as it sheds jobs and restructures for survival. A potential IPO, as rumored by the German platform Gründerszene, seems speculative at best in light of its deep-rooted issues with compliance and financial stability.
Key Points:
- Solaris, a Berlin-based fintech, is cutting 240 jobs, about a third of its workforce, due to significant financial losses.
- Major layoffs are concentrated in the UK subsidiary, Contis, with plans to reduce 15% of Solaris‘ remaining workforce.
- The fintech’s 2023 losses total €178 million, primarily due to write-downs of Contis and BaFin-imposed financial requirements.
- Speculation arises regarding a potential IPO despite ongoing profitability challenges.
Short Narrative:
Solaris is facing a major internal restructuring, with over 240 job cuts aimed at stemming financial losses and positioning the company for future profitability. The majority of these layoffs affect the UK-based subsidiary Contis, acquired in 2021.
Despite the heavy reductions, Solaris continues to struggle with profitability, reporting a €178 million loss in 2023, largely due to Contis-related write-downs. CEO Carsten Höltkemeyer remains optimistic about a profitable turnaround by next year, yet questions linger about whether this will be sufficient to stabilize the company. In the past, Solaris has been labeled a high-risk payment processor in scams, raising doubts over the seriousness of its IPO plans, especially considering its ongoing structural and compliance problems.
Actionable Insight:
- Closely monitor Solaris‘ upcoming financial statements and regulatory interactions, particularly regarding its partnership with Bitpanda and the ADAC credit card program.
- Be wary of investing or entering partnerships until clearer financial stability is demonstrated.
Compliance Insight:
Solaris has faced significant regulatory pressure from BaFin since 2020, when deficiencies in money laundering prevention and customer reviews were identified. In response, BaFin increased the fintech’s equity requirements and imposed a costly special audit, contributing to its financial strain. Despite opposition to certain restrictions, such as reducing customer deposits, Solaris remains under strict regulatory supervision. Recent indications from BaFin suggest some leeway for new business, but the ongoing compliance issues remain a serious obstacle to Solaris‘ growth strategy.