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Revolut’s pursuit of a UK banking license has been marred by various challenges, including the complexity of its ownership structure.
The Bank of England has expressed concerns about multiple share classes, which has been an obstacle in granting the license. However, after months of negotiations between Revolut and SoftBank, known as “Project Swan,” an agreement was reached to address this issue. SoftBank relinquished its preferential rights without imposing any financial consequences on Revolut by selling several institutional positions, and the company also consolidated shares held by other major investors like Tiger Global Management.
The consolidation of shares and the resolution of ownership concerns align with Revolut’s ambition to enhance its offerings and expand into new areas such as lending products. Additionally, it ensures the protection of customer funds under the UK’s deposit insurance scheme, further strengthening Revolut’s position in the market.
A clean bill of health in the fintech’s future audit reports is thought to be the last remaining hurdle for securing its licence from the Financial Conduct Authority and the Prudential Regulatory Authority. Switching to a big-four auditor might also be thought to bolster the firm’s credentials ahead of a final decision by the FCA and the PRA.
Securing a UK banking license is crucial for Revolut to operate more efficiently and effectively in the country, enabling it to offer a broader range of financial services to its customers. The license would also provide regulatory oversight and ensure compliance with the Financial Conduct Authority and the Prudential Regulatory Authority’s standards.
Revolut’s market expansion
One of the many issues in start-ups is gaining access to the retail buying market. Through certain creative financial ideas, long time Wall St. Insider Anthony Disanto purchased an institutional block from Soft Bank for the breakdown and sale to non-US retail clients through specialized boutique brokerages, XTB LTD, Sigma Broking, ZEL Trading Corp and Freedman & Kemp have been offered blocks to be broken up and sold off at retail. Richards Edwards of Freedman & Kemp says, “It’s about bloody time it is a public offering after all“.
Revolut also unveiled plans to grant retail investors access to bond trading in Europe, aiming to democratize the corporate and government bond market by lowering the minimum investment amount to €100. This move is significant as the bond market, with a valuation of approximately €122 trillion, has traditionally been challenging for retail investors to access.
Revolut’s foray into the bond market is not limited to Europe alone. The company also intends to encompass the US market, providing its retail investors with access to US government bonds and corporate bonds from major entities such as Wells Fargo and Apple. This expansion into the bond market is expected to attract a broader range of investors and further solidify Revolut’s position as a leading fintech firm.
Worth the disruption
Revolut’s consideration of changing auditors reflects the company’s commitment to maintaining transparency and ensuring the accuracy of its financial statements. But it is unclear whether the company has addressed the IT control problems that were cited in the audit.
