Senior government ministers have asked to meet the bosses of Britain’s most valuable fintech firm, Revolut, amid reports that the company’s banking licence application may be refused by UK City regulators.
The Guardian understands that the stated intention of the meeting is to discuss the government’s growth agenda but it comes amid a series of complaints from businesses including Revolut over regulatory hurdles that their bosses claim could drive firms abroad.
The move follows reports overnight that City regulators inside the Bank of England intend to reject the fintech firm’s application for a UK banking licence after Revolut’s auditor, BDO, raised concerns over its balance sheet.
BDO said in the company’s delayed 2021 annual report released in February that its auditors were unable to get a complete picture of some of Revolut’s revenue and as a result it, or other financial balances, could be “materially misstated”.
The meeting – which is likely to involve Treasury and business ministers – will take place in the next week or two, with Revolut expected to be represented by its chief executive, Nik Storonsky, and its chair, the Aberdeen Asset Management co-founder Martin Gilbert.
The government, Revolut and the Bank of England declined to comment.
Revolut is waiting for UK approval of its banking licence, more than two years after it lodged its application. A banking licence would allow Revolut to hold its own customers’ deposits, and use them to offer its own-branded loans to customers, including mortgages. This would offer a new stream of income, and would probably open the door to banking licences in other countries, including the US.
But UK regulators have had a number of reputational issues to consider, with the fintech firm facing criticism for the late filing of accounts, EU regulatory breaches and its corporate culture.
While regulators could deny Revolut a licence, if the firm is approved, it is likely to start with a temporary, restricted licence. Known as “mobilisation” under the regulator’s licensing handbook, this option would limit deposit-taking for about 12 months, in order to give the firm time to address shortfalls in its operations. This usually happens in cases where firms are in the process of fixing outstanding problems, but have not yet implemented those full changes.
However, the slow pace of the application process has hit a nerve with Revolut bosses, including Storonsky, who recently told the Times that it was “hard to do business in the UK” where there were high taxes and “an extremely bureaucratic regulator”.
He also said the company – which became the UK’s most valuable fintech firm at a $33bn (£26.5bn) valuation in 2021 – would probably choose to list the company in the US rather than London if it were to go public.
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The comments were a further blow to government plans to draw more business to the UK and to the capital’s stock exchange.
The chancellor, Jeremy Hunt, who earlier this year praised Revolut as a “shining” success, said earlier this week that concerned bosses should “come and talk” to ministers, adding that regulators would soon be forced to consider UK competitiveness and the government’s growth agenda in their daily operations.
“In Revolut’s case in particular, I have had a number of discussions and we are introducing a growth duty for our financial sector regulators, in the financial services and markets bill that is coming up,” Hunt told the British Chambers of Commerce conference on Wednesday. “And they have been very responsive recently in understanding the need to foster the UK competitiveness, and fintech is one of our great success stories.”
Revolut was founded as a pre-paid card firm offering currency exchange, but has since exploded into a wide-ranging financial company employing more than 6,000 staff and serving 27 million customers in 37 countries, with more than 50 products and services. As well as money transfers, it offers home rentals, buy now, pay later credit and a service that issues wages in advance.
