Following this announcement, the financial services firm’s plans to launch mortgages next year could be delayed by a couple of regulatory interventions from the Central Bank of Ireland. Revolut also aimed to provide credit solutions in the region by leveraging its banking licence which was provided in Lithuania, where the company is regulated.
Financial experts mentioned that there was some confusion about the level of supervision the Central Bank of Ireland would impose on Revolut’s mortgage operations, while some also insisted that the bank would need to be involved in the process of overseeing any move to offer mortgages in Ireland, despite the company being regulated from Lithuania.
According to company officials, such an initiative could shake up the market where AIB, Bank of Ireland, as well as PTSB issue 93pc of new mortgages between them. At the moment, Revolut already provides current accounts, loans, motor insurance, savings accounts, credit cards, Buy Now, Pay Later (BNPL) loans, as well as investments.
The financial services firm was also likely to be regulated by a combination of the Lithuanian Central Bank, the European Central Bank (ECB), as well as the Central Bank of Ireland. The regulatory requirements also request that mortgage lenders put aside a set amount of capital when they issue a mortgage. These laws are most likely to apply to Revolut as well, which will not allow the company to offer low mortgage rates.
The capital rules are currently seen as restrictive in the region, while also being in place as lenders encountered huge difficulties and challenges if they tried to repossess in the moment when the borrower was in default. In addition, for Revolut to deliver mortgages in the country, it would be needed for the company to abide by the Irish Consumer Protection Code and the Code of Conduct on Mortgage Arrears.
Currently, there are no comments made by the Central Bank of Ireland on whether other regulatory rules in place for Irish mortgage providers, such as the requirement on the amount of capital they had to put aside during the process of issuing a mortgage, would apply to Revolut. It is understood however that rules for Irish mortgage providers on loan-to-deposit ratios, as well as loan-to-value, would apply to the company.
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