Revolut secures UK banking licence after a three-year wait
Revolut, a London-based fintech firm, has successfully obtained a banking license in the UK, marking the end of a three-year regulatory battle and paving the way for its expansion plans in its home market. The company, which initially applied for the licence in early 2021, announced that it had received the permit from the Prudential Regulation Authority (PRA).
The application process was fraught with challenges, including an auditor’s warning that they could not fully verify the revenue figures in the group’s 2021 accounts. Despite these hurdles, Revolut, which already holds a European banking licence from Lithuanian authorities and was granted one in Mexico this year, remained focused on securing a UK licence.
The PRA’s approval will enable Revolut to broaden its product and service offerings in its largest market. This is a significant vote of confidence in the company and will enhance its prospects of obtaining banking regulation in other key markets, such as the US.
Nik Storonsky, CEO of Revolut, expressed immense pride in reaching this crucial milestone. Francesca Carlesi, who joined Revolut as the CEO of its UK entity at the end of last year, hailed the license as a significant step forward for both Revolut and its customers.
Revolut received the licence with restrictions, a common practice for new lenders. This will allow the company to develop its UK banking operations before launching them. Revolut, founded in 2015, has approximately 9 million customers in the UK and over 45 million globally.
As a fully-fledged bank, Revolut will be able to offer new products, including mortgages. Its customers will also be included in the Financial Services Compensation Scheme, providing them with deposit protection of up to ￡85,000.
Setting the stage for enhanced services
Revolut, last valued at $33 billion in a 2021 fundraising round, is currently in discussions to sell about $500mn worth of shares in a deal that would value it at approximately $40 billion. Its aggressive overseas expansion has made it significantly larger than other lenders to which the PRA has granted a UK license in recent years.
Revolut faced several obstacles and intense negotiations in its journey towards approval. Regulators awaited a clean audit of Revolut’s full-year accounts after auditor BDO warned last year of a risk of material misstatement in the bulk of its 2021 revenue. The Bank of England also demanded that Revolut simplify its share structure to be regulated as a bank, leading to a dispute with Japanese investor SoftBank that was eventually resolved.
In 2020, Revolut brought in city veteran Martin Gilbert as chair to help manage its relationship with regulators. Last year, it lost the head of the UK entity that applied for the licence and its chief financial officer. The PRA declined to comment on the matter.
