Revolut attains share deal with SoftBank

The Bank of England’s condition for offering a UK licence to Revolut was to collapse its six classes of shares. The agreement in principle does not include any additional issuance of top-up shares for SoftBank, nor does it financially impact the company. Other investors, including Tiger Global Management, venture capital firm TCV, Balderton Capital, and Ribbit Capital, are currently discussing the matter or already agreed to transfer their shares into a single class.

Revolut’s banking licence is also impacted by the fintech’s failure to provide clean and timely financial accounts for its main corporate entity. This brought persistent contention with the BoE’s Prudential Regulation Authority (PCA) and the FCA. Moreover, Revolut’s systems have been under scrutiny from the UK’s FCA over red-flag accounts that were restricted by the National Crime Agency (NCA). Allegedly, the company allowed approximately GBP 1.7 million to be released from accounts flagged as suspicious between July and August 2023. However, according to the Financial Times, Revolut notified the FCA only during September 2023, claiming that only GBP 500,000 was released. 

Revolut first applied for its UK banking licence back in January 2021, with the Prudential Regulation Authority and the Financial Conduct Authority determining if the neobank meets the criteria to operate as a bank following Brexit. By being granted a banking licence, Revolut would be allowed to provide full-service current accounts with essential products, including overdrafts, loans, and deposit accounts.

In May 2023, the Bank of England told the Treasury that it was planning on denying Revolut’s application for a banking licence, due to worries regarding its balance sheet, after the issuance of an audit opinion in late accounts in March 2023. During that period, the PRA warned the government that it expected to issue a statutory warning letter to Revolut, though it was supposedly never delivered.

Although the company owns a Lithuanian banking licence, by obtaining UK permission, the company may gain support in other important countries, including the US. The licence is set to considerably improve Revolut’s confidence and reputation in the financial industry, making the company subject to the FCA. Moreover, the banking licence would demonstrate the fintech’s commitment to transparency, compliance, and ethical banking practices, drawing in more customers who want the protection and trust of a licenced bank.  

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