Revolut’s global goal thrown into jeopardy

Revolut’s global ambitions are at stake as the financial services company struggles to secure a prestigious UK banking license.

The UK’s most valuable fintech company has been waiting for approval for more than two years – despite repeatedly saying it was close to being greenlit.

Insiders now fear the difficulties could make foreign regulators nervous and their decisions will depend on the outcome of Revolut’s efforts to win over British officials. A final decision on the permit is expected within a few weeks.

It follows a series of embarrassing setbacks for the company in recent months, including the departure of its chief financial officer and a warning from the accountant that its delinquent accounts may have been “materially inaccurate.”

Frustrations boiled over last week when co-founder Nik Storonsky lashed out at officials, saying it had been a “long and exhausting” process and that Revolut would no longer consider going public.

A senior source close to the company later said the company was still in talks with UK regulators.

But there were growing concerns about the ‘dominant effects’ of the UK’s problems and whether they could harm efforts to acquire licenses abroad.

Revolut had already been stamped in Europe, through a license obtained in Lithuania, but it has also been eyeing other countries, including the US and Singapore.

David Jarvis, the boss of Griffin, a recently authorized British bank, said Revolut would struggle to get licenses elsewhere if the application was ultimately unsuccessful in the UK. “Other regulators will certainly be watching the Bank of England,” Jarvis said. “It is a very credible and respected regulator.”

Revolut was founded in London in 2015 by former Credit Suisse and Lehman Brothers trader Storonsky, 38, and Vlad Yatsenko, 39.

The group, which started as a prepaid exchange card, now has 28 million customers worldwide and operates in more than 200 countries and regions.

In the UK, it is regulated as an electronic money institution, which places restrictions on what it can offer. But it still offers a range of services.

Customers can open an account via the app and have a debit card.

They can access resources including foreign exchange, pet insurance, and vacation home rentals, while users can also trade cryptocurrencies, stocks, and gold.

A banking license in the UK would allow it to hold customer deposits and borrow money – which becomes more lucrative as interest rates rise.

License applications must be approved by two regulators: the Financial Conduct Authority and the Bank of England’s Prudential Regulation Authority. A darling of the British tech scene for many years, Revolut was hailed by Chancellor Jeremy Hunt as a ‘brilliant’ success. It attracted City heavyweights such as veteran Revolut chairman Martin Gilbert.

But it has taken a series of blows this year as a large number of senior staff have left.

Finance chief Mikko Salovaara resigned last week for ‘personal reasons’, while UK bank chief James Radford resigned in March and Group Chief Operating Officer Michal Laube left in February.

Salovaara’s departure came just two months after the group released its financial accounts.

This showed the company was making a profit in 2021, but the auditor issued a warning that some of its earnings may have been reported “materially inaccurate.”

At the time, Salovaara insisted that Revolut was on track to get a UK banking license “any day”.

A Revolut insider blamed staff retention issues on the regulatory delay. It was claimed that the company “can’t really get off the ground” until it gets full approval, leading to internal frustration.

The company also suffered a setback in April when investor Schroders valued it at £14bn, which was a far cry from the £27bn price tag it boasted in its latest round of funding in 2021.

Analysts said that instead of rejecting Revolut’s application outright, the Bank of England could ask it to withdraw its application.

Revolut declined to comment.