Bank of England set to decline Revolut's application for banking licence

Monday 22 May 2023 13:18 CET | News

The Bank of England has told the Treasury that it is planning to reject Revolut's application for a banking licence, after a two-year campaign by Britain's most valuable fintech company.

In March, the Prudential Regulation Authority (PRA), the bank's licencing arm, warned the government that it expected to issue a statutory warning letter to Revolut within a few weeks.

The Bank of England is planning to reject Revolut's application for a banking licence, after a two-year campaign by Britain's most valuable fintech company.

It said that the company's first application would be denied due to worries about its balance sheet, after the issuance of a qualified audit opinion in late accounts the same month. According to Revolut, auditors were concerned about revenues rather than the balance sheet.However, it is thought that the warning letter was not delivered, and urgent conversations are currently taking place behind the scenes in an attempt to save the licencing application.

There is evidence that the government is becoming increasingly upset with regulators' treatment of enterprises in developing areas, leading to charges that Britain is a hostile environment for entrepreneurs.

According to The Telegraph, the PRA warned Revolut that before a licence could be granted, it needed to present a set of accounts with an unqualified audit opinion and simplify its share structure.

The impediments

On the heels of a flurry of worldwide development, Revolut, a financial app that covers current accounts, payments, cryptocurrency trading, and abroad spending, has become one of the world's most valuable fintech businesses and Britain's most valuable digital company.

Previously, the company's auditors provided a qualified opinion on its books, stating that they were unable to satisfy themselves about the 'completeness and occurrence' of roughly GBP 500 million in sales. A company that receives a statutory warning notice has one month to contest it. Following that, a final decision notification is delivered.

If Revolut is denied a licence, its present services will be unaffected. However, the firm would be unable to provide mortgages and loans to UK consumers, who would account for more than 30% of its income in 2021. Customers' funds are currently safeguarded by safeguarding standards, and this will not change.

The importance of the UK banking licence

Although Revolut currently has a Lithuanian banking licence, obtaining UK permission is seen as a critical step in gaining support in other important countries like the US. In early 2021, the bank sought a licence.

Obtaining a banking licence in the UK would considerably boost Revolut's confidence and reputation in the financial industry. As a licenced bank, Revolut would be subject to the Financial Conduct Authority (FCA), a renowned regulatory organisation in the UK. Customers will be assured that Revolut's activities comply with stringent banking regulations and consumer protection legislation. The banking licence would demonstrate Revolut's dedication to transparency, compliance, and ethical banking practices, attracting more clients who desire the protection and trust that only a licenced bank can provide.

With a UK banking licence under its belt, Revolut would be in a better position to pursue licences in other countries. This would simplify the process of entering new areas and broaden Revolut's user base globally. Revolut would be better positioned to create collaborations, get regulatory approvals, and acquire customer trust in other markets if it used the legitimacy of a UK banking licence.

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Keywords: banks, banking license, fintech, payments , crypto
Categories: Banking & Fintech
Companies: Bank of England, Revolut
Countries: United Kingdom
This article is part of category

Banking & Fintech

Bank of England



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