By Tom Wilson, Sinead Cruise and Tommy Reggiori Wilkes
LONDON (Reuters) – Financial technology firm Revolut has received a UK banking licence with some restrictions, it said on Thursday, ending a three-year wait for the authorisation and removing regulatory uncertainty that had held back its ambitions in Britain.
London-based Revolut is one of a handful of financial services apps – commonly known as fintechs – to emerge in Britain over the last decade, offering services without physical branches.
The licence is another step in Revolut’s journey towards the stock market listing executives have said they want to pursue, and comes after Revolut’s application for one ran into difficulty following scrutiny over its internal accounting.
It takes the fintech firm, which operates globally and has more than nine million UK customers and 40 million globally, closer to having the same UK permissions as the traditional banks it seeks to challenge.
Revolut said in a statement it had entered the “mobilisation” stage of its UK efforts that will allow it to complete building its UK banking operations ahead of launching in the market.
During the 12-month mobilisation stage, new banks must demonstrate they will be fully operational and address additional issues identified by the regulator before they can trade fully.
They can secure investment, recruit staff and bolster IT systems, although the amount of total deposits the bank can accept is limited, according to the website of Britain’s banking regulator, the Prudential Regulation Authority.
Founded in 2015 by Nik Storonsky, Revolut has grown rapidly by offering customers payments services, loans in some markets and the ability to trade stocks and cryptocurrencies, to become Europe’s most valuable start-up.
But the company has drawn regulatory scrutiny over its internal accounting and twice delayed publication of its full-year accounts in recent years. Revolut’s auditor said it could not independently verify all the revenues in its 2021 accounts.
Revolut’s interim chief financial officer said this month the company had since improved internal controls.
The bank posted a record pre-tax profit of 438 million pounds (at the time equivalent to $554 million) for 2023 on strong user growth and soaring interest-related income, in accounts filed this month ahead of a September deadline.
Revolut could be valued at north of $40 billion through a planned share sale, Reuters reported last month.
Storonsky, Revolut’s CEO, said in the statement that the announcement was a milestone in the company’s journey that would “ensure we deliver on making Revolut the bank of choice for UK customers”.
($1 = 0.7759 pounds)
(Reporting by Sinead Cruise, Tom Wilson and Tommy Reggiori Wilkes; Editing by Kirsten Donovan, Alexandra Hudson, Barbara Lewis and Susan Fenton)
