A month after payment app said banking licence was imminent… regulator cautioned over Revolut
- Fintech firm indicated that long-awaited licence was on verge of being granted
- It believed UK banking licence would be granted ‘imminently’ by FCA and PRA
- But concerns have since mounted over its long-delayed 2021 accounts
Regulators are being urged to look very closely before granting Revolut a banking licence – a month after it said an announcement was imminent.
The fintech firm indicated at the start of March that a long-awaited licence was on the verge of being granted by watchdogs.
But concerns have since mounted over its long-delayed 2021 accounts while a crisis in the banking sector has raised wider industry problems.
Angela Eagle, the Labour MP and member of the Treasury select committee, said: ‘I would be gobsmacked if they got a banking licence if they didn’t pass a lot of stringent tests.
‘Those questions need to be answered before they get a banking licence.
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‘Getting a banking licence isn’t easily done and you can’t swindle the tests. There is a worrying backdrop to all of this which I think means the regulators will 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 licence would be imminent, a Revolut spokesman said: ‘We don’t comment on ongoing regulatory applications.’ Gary Greenwood, banking analyst at Shore Capital, said: ‘I would be amazed if the regulator would give them a banking licence in their current situation.
‘They do seem to be a little accident prone at the moment.’
A month ago Revolut – worth £28billion according to its most recent valuation – reported its first ever profit, of £26million, for 2021, as turnover tripled to £636m during the cryptocurrency boom.
It believed a UK banking licence would be granted ‘imminently’ 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 would soon unravel as auditor BDO said £477million of revenues – around three quarters of its turnover – could not be verified and may have been misstated. Revolut later hit out against 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 crisis in the banking sector that has claimed the scalps of a series of US lenders and 167-year-old Credit Suisse has intensified scrutiny across the financial sector and piled pressure on regulators to be on top of potential risks.
Regulators will not comment on the progress of Revolut’s application. But they are certain to have pored over the 2021 results and noted BDO’s reservations.
Earlier this week, an all-party parliamentary group made a strongly worded intervention over Revolut’s application.
Heather Buchanan, executive policy director for the APPG on Fair Business Banking, said: ‘I’d be utterly gobsmacked if Revolut is welcomed into the licensed banking sector.
‘We could be letting in a wolf in sheep’s clothing, and I don’t think that would end well at all for the sheep.’
