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Revolut has secured a UK banking licence, ending a greater than three-year tussle with regulators and delivering a lift to the fintech’s enlargement plans in its house market.
The London-based firm, which first utilized for the licence in early 2021, mentioned on Thursday it had obtained the allow from the Prudential Regulation Authority.
The applying bumped into a number of issues, together with a warning from auditors that they may not totally confirm income figures within the group’s 2021 accounts.
Revolut already has a European banking licence from authorities in Lithuania and was granted one in Mexico this 12 months however its prospects have hinged on securing one within the UK.
The PRA’s approval will permit the fintech to widen the services and products it may supply in its largest market, and will probably be seen as a vote of confidence within the firm that may enhance its probabilities of changing into regulated as a financial institution in different key markets such because the US.
“We’re extremely proud to succeed in this vital milestone within the journey of the corporate and we are going to guarantee we ship on making Revolut the financial institution of alternative for UK prospects,” mentioned chief govt Nik Storonsky.
Francesca Carlesi, who joined Revolut on the finish of final 12 months as chief govt of its UK entity, mentioned the licence was “a big step ahead for Revolut and for our prospects”.
Revolut mentioned it had obtained the licence with restrictions, a standing the fintech mentioned was frequent for brand spanking new lenders and that may permit it to construct out its UK banking operations earlier than launching them.
Revolut has about 9mn prospects within the UK, the place it was based in 2015, and greater than 45mn globally.
Changing into a totally fledged financial institution will permit Revolut, which till now has been working a non-bank “e-money” funds firm within the UK, to supply new merchandise, together with mortgages. Revolut prospects may even be included within the Monetary Companies Compensation Scheme, giving them deposit safety of as much as £85,000.
The corporate, which was final valued at $33bn in a 2021 fundraising spherical, is in talks to sell about $500mn worth of shares in a deal that may worth it at about $40bn. An aggressive abroad enlargement has made it far larger than different lenders to which the PRA has handed a UK licence in recent times.
In accordance with steering from UK regulators, banking licences are usually awarded inside 12 months of an software however Revolut confronted a number of hurdles and tense negotiations because it labored in direction of approval.
Regulators waited to see a clear audit of Revolut’s full-year accounts after auditor BDO mentioned final 12 months that the design of the fintech’s IT system meant there was a threat that the majority of its 2021 income had been “materially misstated” in a delayed earnings report.
The Financial institution of England additionally demanded that Revolut simplify its share construction as a way to be regulated as a financial institution, prompting a dispute with Japanese investor SoftBank that was finally resolved.
The beginning-up in 2020 introduced in Metropolis veteran Martin Gilbert as chair to assist handle its relationship with regulators. Final 12 months it misplaced the pinnacle of the UK entity that utilized for the licence and its chief monetary officer.
The PRA declined to remark.
