UK fintech giant Revolut is facing rejection for its long-pending banking license application amid financial scrutiny.
Reverse facing a possible rejection of your UK banking license application submitted to the Bank of England (boe, British Neobank’s long-pending application for a UK banking license is in jeopardy and could deal a major blow to the company’s operational growth plans. Revolut has been campaigning for a license for two years, with high-ranking executives recently convinced of approval this year. Although the BoE declined to comment on the rejection report, some believe Revolut’s financial situation may have been a factor. The major fintech’s finances have come under scrutiny this year after its auditor cast doubt on its 2021 revenue figures.
Citing insiders, the Telegraph reported that the Prudential Regulation Authority (PRA) demanded certain obligations from Revolut in view of the approval of the license. The obligations included creating accounts with unqualified audit opinions and simplifying their share structure. In March, the PRA, the BoE’s licensing arm, also informed the government of plans to issue a statutory warning.
However, Revolut still has to work with the license more than seven weeks after the PRA was announced. Meanwhile, some reports say that Revolut is in urgent talks behind the scenes to save its license application.
Failure to obtain UK license won’t affect existing inversion services, but could hurt bottom line
Although the loss of the UK license will not affect Revolut’s existing services, Neobank will be unable to offer more traditional services. Off-limits services include offering mortgages and loans to customers in the UK that could potentially boost Revolut’s bottom line.
Revolut has yet to comment on the BoE’s move, with a spokesperson explaining that the company does not address ongoing licensing applications. Despite some reports that the London-based neobank may throw in the towel, others claim that Revolut may continue to pursue a UK license.
Earlier this month, Revolut CEO Nikolay Storonsky said that the delay in issuing licenses was due to the effects of the ongoing US banking crisis. The Silicon Valley Bank-triggered financial meltdown spooked regulators and increased paranoia in the industry, according to the chief executive.
Reverse
Revolut is a financial “super app” that was launched in 2015 and offers a wide range of services to customers. These include current accounts, payments, digital currency trading and foreign spending.
Founded by Storonsky and Vlad Yatsenko, the fintech has become one of the most valuable of its kind in the world. In addition, Revolut leveraged an aggressive global expansion plan to become the UK’s most valuable tech start-up.
The explosive popularity of digital currencies over the past few years also fueled Revolut’s early success. In 2021, crypto trading accounted for a third of the London-based neobank’s revenue. However, during the downturn that characterized most of last year, crypto trading sank to less than 10% of Revolution’s revenue.
Amidst its licensing blues, Revolut has faced several other challenges, including the recent exit of CFO Mikko Salovara. Salovara left the company in early May due to personal reasons, two years after joining in January 2021. His entry into Revolut coincided with the company submitting its license application.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to strip crypto stories down to the basics so that anyone anywhere can understand without a lot of background knowledge. When he is not delving deep into crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
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