Revolut, the prominent FinTech player, has successfully negotiated a share deal with its primary backer, SoftBank.
The move marks a significant milestone in its ongoing efforts to secure a UK banking licence.
The Bank of England’s Prudential Regulation Authority (PRA) had stipulated that Revolut must streamline its share structure, consolidating its six classes of shares into a single class, and simplify its ownership framework to be eligible for the banking licence.
While several investors readily agreed to transfer their shares to a unified class, SoftBank, Revolut’s primary supporter, had initially resisted the change. SoftBank had sought twice the quantity of stock Revolut was proposing in exchange for relinquishing its preferential rights.
Following months of dispute on this matter, both Revolut and SoftBank have reached an amicable resolution. Importantly, this agreement does not involve any new issuance of shares to SoftBank and is not expected to have a financial impact on the company, according to reports by the Financial Times.
Revolut’s quest for a UK banking licence has been a protracted process, spanning over two-and-a-half years. Delays have been attributed to various factors, including concerns raised by the Financial Conduct Authority (FCA) regarding auditing, compliance, and corporate culture issues.
Recent reports have indicated that the FCA is investigating whether Revolut permitted funds to be withdrawn from accounts flagged as suspicious by the National Crime Agency. Additionally, it was revealed last month that the company would defer filing its annual accounts for the second consecutive year.
In the case of the 2021 accounts, they were ultimately filed in March, but the auditor, BDO, highlighted concerns about its inability to verify £477 million of revenue and the inability to vouch for their “completeness or occurrence.” These challenges were attributed to the configuration of Revolut’s internal IT systems.
This resolution with SoftBank marks a significant step forward for Revolut in its pursuit of a UK banking licence, and it will be closely monitored as it navigates the regulatory landscape.
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