A month after the payment app said its banking license was imminent… The regulator warned against Revolut
- Fintech company indicated that the long-awaited license was about to be granted
- It believed the UK banking license would be granted ‘soon’ by FCA and PRA
- But since then there have been concerns about the long-delayed bills for 2021
Regulators are being urged to look very closely before granting Revolut a banking license – a month after it said an announcement was imminent.
The fintech company indicated in early March that a long-awaited permit was about to be granted by watchdogs.
But concerns have since emerged over the long-delayed 2021 bills, while a crisis in the banking sector has led to wider problems in the industry.
Angela Eagle, Labor MP and member of the Treasury Select Committee, said: ‘I’d be stunned if they got a banking license if they didn’t pass a lot of rigorous testing.
‘These questions must be answered before they are granted a banking licence.
Setback: Vlad Yatsenko and Nikolay Storonsky from Revolut
‘It’s not easy to get a banking license and you can’t cheat the exams. There’s a disturbing background to all of this, which I think means regulators are going to be super careful. I would expect the highest kind of work to be done.’
Last night, 30 days after stating that the granting of a UK banking license was imminent, a Revolut spokesperson said: “We are not commenting on pending regulatory applications.” Gary Greenwood, banking analyst at Shore Capital, said: ‘I would be surprised if the regulator gave them a banking license in their current situation.
“They seem a bit accident prone at the moment.”
A month ago, Revolut — worth £28 billion at its most recent valuation — reported its first-ever profit, of £26 million, for 2021, as revenue tripled to £636 million amid the cryptocurrency boom.
It believed a UK banking license would be granted ‘soon’ by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). Those results were released after months of delays, missing a December 31 deadline.
They were soon to fall apart, as accountant BDO said £477m of revenue – about three-quarters of turnover – could not be verified and may have been reported incorrectly. Revolut later took issue with what it described as “misreporting” of the auditor’s opinion, but that may have backfired, with the Financial Times reporting that some independent board members viewed the statement as an “overreaction”.
Meanwhile, a banking sector crisis that has claimed the scalp of a string of US lenders and the 167-year-old Credit Suisse has intensified scrutiny of the financial sector and increased pressure on regulators to oversee potential risks.
Regulators will not comment on the progress of Revolut’s application. But they have undoubtedly dug into the results of 2021 and noted BDO’s concerns.
Earlier this week, a parliamentary group with all parties made a strongly worded intervention about Revolut’s application.
Heather Buchanan, executive policy director for the APPG on Fair Business Banking, said: “I would be utterly stunned to see Revolut welcomed into the licensed banking industry.
“We could let in a wolf in sheep’s clothing, and I don’t think that would end well for the sheep.”