28. November 2024
The automobile club transfers its credit card customers to a young bank with a dubious reputation. Now the bank urgently needs money. What happens to ADAC customers if it has to be settled?
The ADAC did something that actually doesn’t correspond to its reputation: it sent 1.3 of its 22 million members on a journey into the unknown. So many people have a Visa credit card from the automobile club, which they have been able to use to pay without any problems for decades. The club cooperated with the Landesbank Berlin, which organized the processing of the payments. Since September, however, the cooperation partner has been called Solaris – and the lights could soon go out there.
Behind the name is an aging Berlin startup with a banking license. For Solaris, the ADAC deal was the most important deal in its almost ten-year history. But now the so-called “Fintech” is beginning to falter. The ADAC has therefore already had to stop its new credit card business. “We will be working hard on innovative technical solutions in the next few weeks. For this reason, it is unfortunately temporarily not possible to conclude a contract for the ADAC credit card,” it says regretfully on the website. Please understand. And patience. “Applications for new credit cards will be possible again at the beginning of 2025. “They were deliberately suspended during and after the migration in order to speed up the migration of existing customers,” a spokesman added upon request.
What happened: The former partner for the ADAC credit card business, Landesbank Berlin, announced in 2021 that it wanted to concentrate exclusively on its core business as a capital savings bank. This marked the end of the credit card business. Young banks were ready to take over the business, including Solaris. However, why Solaris was actually chosen remains the secret of the ADAC and the responsible board member Mahbod Asgari. “We have no reason to doubt that the cooperation will be successful,” says the spokesman.
Really? The ADAC could have known what it was getting into: Solaris was founded in 2015 and primarily acts as a service provider for other companies by offering its infrastructure and banking license to organize financial products such as credit cards or loans on behalf of third parties. The whole thing is called an “embedded finance platform” and from crypto to stock trading, Solaris has already tried its hand at a number of services with greater or lesser success. It is one of the highest rated fintechs in Germany, but that does not protect it from adversity.
For example, the takeover of the British competitor Contis in 2021 for around 153 million euros was not a success. In contrast to Solaris itself, Contis was profitable at the time. However, last year Contis lost one of its most important customers, the crypto platform Binance. Eight weeks ago, Solaris announced that it would “discontinue large parts of the electronic money institution”. After the takeover, Solaris combined the former Contis business under E-Money Institute. Solaris boss Carsten Höltkemeyer had to announce at a works meeting that more than one in three of the 700 employees had to leave. Since then, Solaris has been a shadow of its former self, say those affected.
The announcement came after Solaris had already clashed with banking supervisors BaFin. The inspectors found “serious deficiencies” in a special audit in 2020, including in combating money laundering and checking customers. They then increased the capital requirements and sent a special auditor to the bank. Solaris was also no longer allowed to accept new customers without consent. Undeterred by this, the fintech and the ADAC started their cooperation talks in this phase.
In March 2024, financial regulators imposed a fine of 6.5 million euros on Solaris for late reporting of suspected money laundering. In July, the supervisory authority also extended the mandate of the special representative and threatened the company with a fine. The cooperation negotiated at that time with the automobile club delayed everything, but it didn’t stop it – it was supposed to be a lifeline for the young bank. In fact, as the number of customers skyrocketed, the regulatory requirements continued to increase – and with them the equity requirements.
The result: Solaris is deep in the red. A loss of 178 million euros was in the bank’s books at the end of 2023, which the ADAC also knew. At the beginning of 2024, the investors behind the fintech had to inject almost 100 million euros. Now the Berliners need up to 150 million more and have therefore called an extraordinary general meeting for Monday next week. If the money doesn’t come, the shareholders could decide at the meeting whether to wind up the bank, it is said. Some consider this to be exaggerated, other insiders speak of a “falling knife” and warn against grabbing the falling knife. They doubt that investors will now be willing to give more money given the avoidance that investors are currently giving Germany.
What does this mean for the 1.3 million ADAC customers? If you have credit on your credit card, you can rely on the government’s 100,000 euro deposit insurance in an emergency, to which Solaris is also subject. “Our credit card customers are protected, regardless of their financing situation at Solaris,” emphasizes the spokesman. However, it is doubtful that what ADAC board member Mahbod Asgari said in 2022 when he made the deal public is valid: “With Solaris we have found the ideal partner for the ADAC credit card program, with which we can seamlessly continue and develop our portfolio. The needs of our existing customers have top priority. With the modern and powerful platform of our new partner, we can continue all successful services for our members and at the same time further expand the range of services.” All data has been transferred, and overall we are “satisfied” with the process, the ADAC spokesman added today. Nevertheless, the following also applies: the ADAC credit card department, which is currently closed to new business, does not look like it will be expanded.
**Considering Solaris’ history of regulatory fines and staffing cuts, what specific measures could the ADAC have taken to mitigate the risks associated with this partnership, and should they have prioritized these measures over the potential benefits offered by Solaris?**
## World Today News: The Future of the ADAC Credit Card
**Introduction:**
Welcome to World Today News. Today we’re diving deep into a story that’s raising eyebrows: the ADAC, a trusted name for millions of motorists, partnering with a young and, some would say, volatile fintech company, Solaris, for its credit card program. Joining us are two guests: [Guest 1 Name and Expertise], and [Guest 2 Name and Expertise].
**Section 1: The ADAC-Solaris Partnership: A Risky Bet?**
* **Host:** The ADAC, known for its reliability and member focus, chose Solaris, a relatively new bank with a history of challenges, to manage its credit card program. What were the potential motivations behind this decision for the ADAC? Could this be seen as a risky move for a large and respected organization?
* **Guest 1:** (Opportunity for guest 1 to discuss potential reasons behind the partnership from the ADAC’s perspective, weighing theメリット against potential risks)
* **Host:** [Guest 2], what’s your take on this partnership? From a financial perspective, do you see any warning signs that might have raised alarms about Solaris’ stability?
* **Guest 2:** (Opportunity for guest 2 to discuss Solaris’ financial history, regulatory issues, and potential red flags that might have been overlooked)
**Section 2: Solaris’ Struggles: A Cascade of Problems**
* **Host:** The article highlights a number of issues plaguing Solaris, from regulatory fines and staffing cuts to a decline in its core business. To what extent do you think these issues contributed to Solaris’ current financial predicament?
* **Guest 1:** (Opportunity for guest 1 to offer insight into the broader fintech landscape, potential challenges faced by young financial institutions, and contributing factors to Solaris’ struggles)
* **Guest 2:** ( Opportunity for guest 2 to elaborate on the specific financial challenges Solaris faces, the implications of regulatory scrutiny, and the potential impact of these problems on its customers)
**Section 3: The Risk to ADAC Cardholders: What Happens Next?**
* **Host:** The 1.3 million ADAC members currently using the Solaris-managed credit cards might be understandably worried about the situation. How secure are their accounts and funds, particularly given Solaris’ financial instability?
* **Guest 1:** (Opportunity for guest 1 to explain the deposit insurance system in Germany and the safeguards in place to protect customer funds, while acknowledging potential concerns)
* **Host:** [Guest 2], what are the possible scenarios for Solaris moving forward? What are the implications for ADAC cardholders in each scenario, both positive and negative?
* **Guest 2:** (Opportunity for guest 2 to outline potential scenarios for Solaris, including potential bailout, acquisition, or even bankruptcy, and discuss the consequences for ADAC cardholders)
**Conclusion:**
* **Host:** Thank you both for this insightful discussion. This situation highlights the complexities of the fintech world and the potential risks associated with partnering with young and less established financial institutions. For ADAC cardholders, it’s a crucial time to stay informed and monitor developments closely.
We encourage our viewers to continue following this story and to reach out to both the ADAC and Solaris with any concerns or questions they may have.
