German fintech rivals to merge in bid to create pan-European leader

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Raisin and Deposit Solutions, two of Germany’s largest fintechs and fierce rivals, have struck a merger aimed at creating a pan-European group that links banks with depositors.

The combined company, which will be called Raisin DS and headquartered in Berlin, will have about 400 banking partners and more than 500 employees.

The deal will end a “continuous tug of war” that has kept both groups on their toes but also lead to a lot of unnecessary duplication, Raisin chief Executive Tamaz Georgadze said on Thursday.

“Despite ten years of strong growth, we are both are still small in absolute terms,” Deposit Solutions CEO Tim Sievers said, adding that they now wanted to “think bigger and create a European champion that can also play it big in the United States”.

The two groups both list savings accounts and products, allowing consumers to compare offerings and then, in some cases, directly deposit money with the banks.

The two privately owned groups have raised €300m in external funding between them so far, with two-thirds coming from Berlin-based Raisin. PayPal is among Raisin’s backers, while Deutsche Bank holds a stake in Deposit Solutions.

The merger comes after the collapse of Greensill Capital, the UK supply chain finance group, raised questions over models that links depositors to banks.

Raisin and Deposit Solutions both listed accounts at Greensill Bank, a German subsidiary of Greensill, that is now under criminal investigation. Raisin also listed accounts at Wyelands Bank, owned by Sanjeev Gupta, the industrialist and Greensill client.

Sievers and Georgadze said the merger is “totally unrelated” to those events, adding that they have been in discussions about a potential tie-up since early last year.

“Of course we did an [internal] review to see what we can learn from the [Greensill] crisis and what we can do to improve, but they don’t think this will have any structural consequences on our market,” said Sievers, adding that all retail investors who put money into Greensill Bank through Raisin and Deposit Solutions were refunded through Germany’s deposit insurance scheme.

The companies declined to reveal the valuation of the combined group or the relative stakes of Raisin and Deposit Solutions.

Deposit Solutions, the slightly smaller of the two, was valued at €1bn in a 2019 funding round. The groups are not raising new funds as part of the deal.

Over the past two years, both companies have grown strongly. “In the last 12 months, we have seen 40 per cent growth,” said Georgadze, with their combined client assets rising to €20bn.

Both Sievers and Georgadze stress that, despite their business rivalry, they have been friends for a while and that it was a merger of equals. “I am very confident we can make that idea work in reality,” said Sievers.

The enlarged company will keep its existing offices, which include operations in New York, London, Manchester and Madrid. It will be led by Raisin’s Georgadze. Sievers will retire from the day-to-day business by the end of the year and then join the company’s advisory board.

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