Revolut’s UK banking licence bid faces global risk scrutiny
Revolut’s pursuit of a full UK banking licence has hit another stumbling block as regulators seek further information on the fintech’s risk controls in light of its accelerating overseas growth.
Officials at the Bank of England have sought commitment from the digital banking juggernaut that it will bulk up its risk management infrastructure to match its international expansion plans.
Morning Wire revealed earlier this year the group was set to miss its 12-month mobilisation stage – the period following licence approval to be fully-operative – in July, owing to the complexity and scale of the application.
Revolut has said it was “progressing through the final stages of mobilisation” and working “constructively with the PRA”.
The $75bn fintech – which will mark the largest mobilisation ever undertaken in the UK – has also said “getting this right is more important than rushing to meet a specific date”.
Technically, the banking watchdog warns if a new bank is unable to complete mobilisation within 12 months, or to the required standards, it may take steps to remove authorisation.
But the Prudential Regulation Authority (PRA) notes it is not a fixed period and can take longer for complex companies. Zopa Bank received its licence at the end of 2018, but had to wait 18 months before its mobilisation restrictions were lifted.
Reeves and Bailey’s Revolut row
The regulator’s demands on risk management, as reported by the Financial Times, follow reports Rachel Reeves had sought to intervene in the firm’s licence pursuit.
The Chancellor had arranged for a meeting with Revolut and the regulators, which was subsequently blocked by Governor of the Bank of England Andrew Bailey.
Reeves appeared at the launch of Revolut’s global headquarters last month, where she championed the firm’s £3bn investment into the UK.
Nik Storonsky, Revolut’s newly UAE-based chief executive and co-founder, said at the new office launch that obtaining a fully-fledged banking licence in the UK was the firm’s “number one priority”.
The straight-talking fintech maverick has been critical of the UK’s regulatory landscape over the last few years, taking aim at the “extreme bureaucracy”.
When questioned on a future London listing for Revolut, Storonky said it was “not rational” when compared to the deeper liquidity offered overseas.