The Mail has revealed that fintech giant Revolut offered to withdraw from the UK as its long-running application for a banking licence dragged on. Speculation mounted that the Bank of England would reject Revolut’s two-year bid for approval, prompting the fintech giant to ask officials if it should abandon its efforts. Revolut urged the Bank to communicate if they did not want their presence.
However, the company received reassurances that the process was ongoing and the Bank was still considering their application. This situation occurred despite Revolut’s auditor stating that they had ‘materially mis-stated’ parts of their overdue accounts.
The revelations follow more than two months of turmoil at Revolut since executives suggested that they would grant the company a licence ‘imminently’, possibly within days.
The company’s impatience appeared to boil over earlier this month when Revolut boss and co-founder Nik Storonsky lamented the ‘long and tiring process’, and warned Britain was an undesirable place to do business.
But the outburst prompted criticism from observers, with one analyst warning that throwing a ‘tantrum’ would not help fintech giant Revolut secure a licence.
Last night, it emerged Bank of England regulators were planning to reject the application.
According to the Telegraph, the Bank’s Prudential Regulation Authority (PRA), which is responsible for licences, informed the Treasury in March that it would reject Revolut’s initial application within weeks due to concerns over its balance sheet.
That would be a crushing blow for the company which has been trying since 2021 to win approval from regulators so it can expand its services in Britain into taking deposits and giving loans.
Financial Conduct Authority (FCA) and the PRA.
Two regulators, the Financial Conduct Authority (FCA) and the PRA, need to approve licence applications.
However, the regulators have not yet delivered the warning notice to Revolut, and the tech firm is currently in urgent talks to salvage its chances of obtaining a licence.
Once regulators hand down a statutory warning notice, a company has up to a month to challenge it.
In addition to that, they send a final notice of the decision.
Revolut was once the UK’s tech darling, hailed as a ‘shining’ success by Chancellor Jeremy Hunt.
It attracted City heavyweights such as fund management veteran Martin Gilbert, who is Revolut’s chairman.
But fortunes have since turned and a rejection would add to the long list of injuries incurred by Revolut so far this year, including a slew of senior members of staff exiting the company.
Finance boss Mikko Salovaara stepped down earlier this month for ‘personal reasons’ while its UK banking chief James Radford resigned in March and the group chief operating officer Michal Laube left in February.
Salovaara’s departure came just two months after the group published its financial accounts.
The company’s financial statements for 2021 showed a profit, but the auditor BDO raised an alert, suspecting that a significant portion of the company’s revenues may have been ‘materially mis-stated’. BDO indicated that it could not independently verify three-quarters of the £636 million revenue reported in 2021.
At the time, Salovaara insisted that Revolut was on course to obtain a UK banking licence ‘any day now’.
The Mail understands Revolut now hopes to produce an unqualified audit opinion from BDO in three months’ time.