(Adds details on Tencent’s investments, German banking sector)
March 20 (Reuters) - Berlin-based digital bank N26 said on Tuesday it raised $160 million in a funding round co-led by China’s Tencent Holdings Ltd and Allianz Group’s digital investment unit.
This brings the total funds raised by the company to $215 million and represents the largest equity financing round in Germany’s fintech sector, N26 said.
Tencent’s investment marks an important foray into western Europe, where its presence has so far been relatively small. The company said a year ago it was rolling out its WeChat app in the UK, creating a beachhead for companies there to sell into the Chinese market.
Last year, Tencent and music streaming company Spotify had agreed to buy minority stakes in each other ahead of the Swedish firm’s stock market listing.
N26, which counts Chinese billionaire Li Ka-shing and Silicon Valley investor Peter Thiel among its backers, is competing with traditional branch-based retail banks by offering a suite of mobile banking services that customers can use entirely from their smartphones.
Last year, N26’s chief executive said the company expected to peel away 5 percent to 10 percent of retail customers aged 18 to 35 from established banks in its core continental European market in the next two to three years.
Germany’s flagship lender Deutsche Bank AG posted its third annual loss in a row as it struggles to curb bloated staffing costs, leaving it vulnerable to disruption by low-cost market entrants.
Germany’s second-biggest lender Commerzbank AG continues to struggle to recover from the financial crisis, and is the target of persistent takeover speculation.
Since its launch in 2015, N26 has expanded into 17 European countries including Austria, France, Spain and Italy.
N26 will use the funds for its international expansion, particularly into the United States and UK later this year, the company said. (Reporting by Abinaya Vijayaraghavan in Bengaluru and Douglas Busvine in Frankfurt; Editing by Subhranshu Sahu and Gopakumar Warrier)