Revolut, Britain’s most valuable fintech company, has received a banking licence from the Bank of England, ending a tumultuous three-and-a-half year wait for approval.
The company said on Thursday morning that it had received “authorisation with restrictions”, an initial approval stage during which new banks build up their operations.
Revolut first applied for a licence in January 2021 and its long wait for approval has led to frustrations with regulators and questions about its $33bn (£26bn) valuation.
It comes as the company prepares for a “secondary” sale of existing staff shares that could value it at up to $45bn.
Revolut said it had entered the Bank of England’s “mobilisation” stage – a path to an eventual full licence that will allow it to make loans and hold protected deposits.
During the phase, also known as authorisation with restrictions, banks are prevented from holding more than £50,000 in deposits. They are meant to use the time to build up their IT systems and other processes to prepare for being a fully-authorised bank.
The process can take several months. It is typically completed within a year but can be indefinite.
Receiving a banking licence is a key milestone for Revolut, which aspires to be an all-in-one “super app” for finance, covering loans, investments and payments.
The approval is likely to pave the way for seeking licences in other countries including the US. Revolut already operates as a bank in the EU due to having a Lithuanian licence.
The company’s unusually-long wait for a licence came as regulators raised questions about its accounts, which came with a qualified opinion in 2021 after auditors were unable to verify around two-thirds of its revenues.
It has also been required to simplify its complex shareholder structure, which had given preferred rights to SoftBank, the company’s biggest investor.
The Telegraph revealed last year that officials at the Bank of England had told Treasury staff they intended to reject the licence application. Negotiations subsequently resumed, with the Bank insisting on a clean set of accounts and simplified shareholder structure.
However, the long wait had led Revolut’s chief executive Nikolay Storonsky to hit out at British authorities, saying the UK had an “extremely bureaucratic regulator” and saying the company was unlikely to list in London.
Revolut said nothing would change for its 9m UK customers during the mobilisation process, with accounts continuing to be operated by a separate entity with an “e-money” licence for the time being.
Mr Storonsky said: “We are incredibly proud to reach this important milestone in the journey of the company and we will ensure we deliver on making Revolut the bank of choice for UK customers.”
Francesca Carlesi, Revolut’s UK chief executive, said: “Today’s announcement is a significant step forward for Revolut and for our customers. It is a tremendous responsibility to be a bank in the UK and we will work relentlessly to offer products and services that improve the financial lives of everyone who uses Revolut.
“This is the next phase in Revolut’s journey in the UK – we can’t wait to get going.”
Revolut staff are due to sell around $500m in shares, with Mr Storonsky selling part of his own stake, in the coming weeks.
The company recently said that revenues almost doubled in 2023 to $2.2bn, with profits rising to $545m.
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