German unicorn Solaris has been through “some tough times” but is “on the right track", after making job cuts and writing off the value of one of its business units, says its CEO.
The Berlin-based Banking-as-a-Service provider, a unicorn last valued at €1.6bn in 2023, is one of Europe’s preeminent startups but has announced cuts to its business, including the closing of its Lithuanian business, amid the loss of key partners and troubles signing new businesses.
Solaris currently employs 700 staff across eight offices including Germany, the UK, Lithuania, Singapore and India.
Solaris declined to disclose the number of jobs cuts to its business. The majority of the job cuts are across Solaris’s Electronic Money Institution (EMI) business, which is understood to employ 200 people.
Carsten Höltkemeyer, Solaris CEO, says it has made the restructure now as Solaris looks to meet its goals of making a full-year profit; switching its go-to-market strategy from banks and fintechs to higher value corporate customers; and being fully compliant with regulators.
Höltkemeyer says:
“The view here from us is that now we have done ADAC migration.
“We have gone basically very hard at all the remediation of audit finance etc. We are well advanced in all of that.
“And now I think for us it is important to now be very clear on our cost target going forward, to be very clear on what kind of revenues we are expecting for the future years and what kind of cost base is needed for that."
The German motor association ADAC is a landmark corporate client for Solaris, which provides co-branded credit cards to its 22 million members.
Solaris has two EMI licences, which allow it to offer payment and other financial services but not operate as a bank, one from the UK FCA and one from the Bank of Lithuania. It also has a German banking licence.
The EMI licences came courtesy of its purchase of UK fintech Contis in 2021, which at the time was dubbed by Solaris then CEO Roland Folz a “fantastic business".
Solaris has now “discontinued major parts” of the Contis business, which was hit with a €840,000 fine by the Bank of Lithuania over AML violations last year, and made a €123m write-off of the business in its accounts, which means it has no financial value. It is understood to have closed its EMI business in Lithuania completely.
Höltkemeyer said it was not a mistake to buy the business, which has been hit by struggles to land new clients.
He said:
“I wouldn’t call it a mistake. I completely understand why this was done. The environment has very significantly changed. My job is to reassess decisions."
Solaris has also reported that it made overall loss of €178m in 2023 with revenues of €137m.
Along with the €123 write-down, it also incurred losses due to trying to remedy BaFin restrictions and cutting business units.
Höltkemeyer said Solaris will be “super-close” to making a full-year profit in 2025.
Earlier this year, the German bank regulator BaFin said it had threatened to fine Solaris if it doesn't meet deadlines to improve anti-money laundering controls and other shortfalls.
The shortfalls also relate to regulatory reporting and the way it tracks its contracts.
BaFin also said that it was extending the mandate of a special monitor installed since 2022 to oversee progress- this means that Solaris can’t bring in new partners without the regulator’s approval.
The CEO says Solaris has spent a "significant amount of money” on remediation and that conversations with BaFin are now “well advanced”.
Asked if this means restrictions will be likely taken off, Höltkemeyer said “I don’t expect in 2025, this to be a very significant undertaking” pointing out that BaFin now allows Solaris to put forward new business opportunities.
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