German BaFin Exposes Deficiencies At Online Broker FlatexDEGIRO!

Bad news from Frankfurt-based online broker FlatexDEGIRO: BafFn has conducted a special audit and found deficiencies in the organization and corporate governance, as the SDax company announced. The regulator ordered the broker to implement a proper organization and increase the capital. The day-to-day business is weak. The company significantly reduced its 2022 forecast.

According to the notification, BaFin submitted its audit report to the broker in November. FlatexDEGIRO has yet to give an exact date. However, Bafin said that a result of the audit would “impose on the company, among other things, to ensure a proper business organization.” It also said it had “ordered temporary additional capital requirements.”

As a consequence, Chief Financial Officer Muhamad Chahrour becomes the deputy CEO besides CEO Frank Niehage. Benon Janos becomes the new CEO. Due to new capital requirements, FlatexDEGIRO will retain its net profit for the year.

The board reduced the forecasted group revenues for 2022 from €400 to €440 million to only around €380 million. Operating profit is reportedly expected to fall significantly short of the previous target: instead of the previously forecast return on sales (adjusted Ebitda margin) at the previous year’s level of 42.4 percent, only around 37 percent is expected. FlatexDEGIRO had already lowered its forecasts in June.

The company will continue to work closely with Bafin, it said. The company’s own Flatexdegiro Bank has already installed a new Head of Risk, Matthias Heinrich. It added that there have also been organizational changes in the management of the Internal Controls, Risk Management and Regulatory Reporting departments.

In addition, the Supervisory Board and the Management Board have decided to capitalize FlatexDEGIRO Bank AG with an additional €50 million from its resources. So far, the hardcore capital of the Flatexdegiro Group is 180 million euros. The current year’s surplus is also to be retained in full.


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