Through this, Revolut agreed to simplify its ownership structure with SoftBank, thereby addressing obstacles related to receiving a banking licence in the UK market. According to officials, negotiations between Revolut and its Japanese investor have been ongoing for months, with SoftBank demanding significant compensation for giving up priority class shares.
Details of the Share Deal
One of the conditions set by the Bank of England for Revolut to obtain a UK banking licence was to consolidate its share structure into one class. The agreement does not involve issuing additional shares to SoftBank, nor will it impact the company financially. Other investors, including Tiger Global Management, TCV, Balderton Capital, and Ribbit Capital, are currently discussing or have already agreed to transfer their shares into a single class.Revolut’s banking licence application was also hindered by issues with its financial accounts for the main corporate entity, leading to ongoing disputes with the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA). Additionally, Revolut faced scrutiny from the UK’s FCA over red-flagged accounts restricted by the National Crime Agency (NCA), where the company allegedly allowed around GBP 1.7 million to be released from flagged accounts between July and August 2023. According to reports, Revolut notified the FCA only during September 2023, claiming that only GBP 500,000 was actually released.
Revolut’s UK Banking Licence Application
Revolut first applied for a UK banking licence back in January 2021, with the Prudential Regulation Authority and Financial Conduct Authority evaluating whether the neobank met the criteria to operate as a bank post-Brexit. Securing this licence would allow Revolut to offer full-service current accounts alongside essential products like overdrafts, loans, and deposit accounts.In May 2023, the Bank of England informed the Treasury that it planned to reject Revolut’s application due to concerns over its balance sheet, following an audit opinion in late March 2023. During this period, PRA officials reportedly expected to issue a statutory warning letter to Revolut, though it was supposedly never delivered.
Obtaining UK permission would not only strengthen Revolut’s presence but also provide support in other critical markets, including the US. The licence would significantly boost Revolut’s confidence and reputation within the financial industry, subjecting it to stricter FCA oversight. This move would demonstrate Revolut’s commitment to transparency, compliance, and ethical banking practices, attracting more customers who prefer the security and trust of a licensed bank.
