UK regulator rejects Revolut’s banking licence application

abdelaziz Fathi

Revolut’s pursuit of a UK banking license is facing a setback as the Bank of England has reportedly informed the Treasury of its intention to reject the highly valued fintech company’s long-standing application. This decision comes after a two-year campaign by Revolut to obtain the license.

Revolut

According to the Telegraph, BoE’s Prudential Regulation Authority (PRA), the central bank’s regulatory arm responsible for granting licenses, told the government in March that it intends to issue a statutory warning notice to Revolut within a few weeks. The PRA cited concerns over Revolut’s balance sheet as the primary reason for the anticipated rejection. These concerns arose following a qualified audit opinion on overdue accounts that was released in the same month.

Britain’s most valuable start-up faced questions when its auditor revealed concerns over its long delayed 2021 accounts. BDO, the UK’s fifth largest accounting firm, said it had been unable to fully verify nearly £500 million of revenues, adding that “the risk of an undetected material misstatement was unacceptably high” due to the configuration of Revolut’s internal IT systems.

The challenger bank has responded to the auditors’ concerns, stating that they relate to revenues rather than the company’s balance sheet. However, it appears that the PRA remains unconvinced and is likely to proceed with rejecting the application based on its assessment of Revolut’s financial position.

Back in September, Revolut’s co-founder and CEO, Nik Storonsky, expressed confidence that the license was nearly secured. Similarly, in March, he reiterated that the license was expected to be granted “any day now.” However, it seems that Revolut’s path to obtaining the license is yet to be successfully completed.

This development presents a significant challenge for Revolut, as obtaining a banking license is crucial for expanding its services and operating as a fully-fledged bank. The payment giant has been among a number of app-only fintech companies that are looking to branch into banking as they diversify their revenue stream and bring new services to their existing customers.

Revolut’s smaller competitors, such as Monzo and Starling, have successfully obtained banking licenses in the UK. They have gone through the same rigorous regulatory process set up by the relevant authorities to offer a broader range of financial services, including current accounts, savings accounts, and lending products.

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