Revolut receives long-awaited UK banking license

by with No Comment Tech

Image Credits: Revolut

Revolut has been granted a banking license from the Prudential Regulation Authority (PRA) in the U.K. This is a significant milestone for the London-based fintech company, particularly since it has been trying to secure this license since 2021.

Revolut has 45 million customers around the world, but its home market remains its most important one, with 9 million clients. The fintech also offers more products and services in the U.K. than in many other markets.

The company already has a banking license in the European Union. The Bank of Lithuania helped it get a license in 2018 and the company has been taking advantage of European passporting rules to operate in other European countries.

But the story has so far been different in the U.K. Not having a banking license in its home country has hindered the company’s capabilities when it comes to offering credit products (personal loans, credit cards, etc.) there and controlling a bigger chunk of its infrastructure.

“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 U.K. customers,” Revolut’s co-founder and CEO, Nik Storonsky, said in a statement.

Things aren’t going to change overnight for Revolut’s customers. The company says that the PRA has granted an authorization with restrictions, and Revolut is entering the so-called “mobilisation” stage. Other challenger banks, like Monzo and Starline, have been through the same process in the past.

According to the Bank of England, this mobilization phase can last a few months but shouldn’t take longer than 12 months. The most important restriction during that stage is that the bank cannot hold more than £50,000 in total customer deposits.

The PRA has granted a license to a subsidiary of Revolut Group Holdings Ltd, so the company isn’t going to transfer its U.K.-based customers to this new subsidiary just yet. Instead, the company will keep operating as an e-money institution regulated by the Financial Conduct Authority.

In its latest annual report, Revolut reported $2.2 billion in revenue in 2023 (£1.8 billion). More importantly, the company managed to generate $545 million in pre-tax profit (£438 million).

This was the first time in the last three years that the company published its audited annual results before the deadline. In other words, Revolut is growing up and becoming a more transparent company on the financial front. That must have contributed to today’s decision from the Prudential Regulation Authority.

UK neobank Revolut valued at $45B after secondary market sale

by with No Comment Tech

Nik Storonsky, Founder & CEO, Revolut, on Centre Stage during day two of Web Summit Rio 2023

Image Credits: Piaras Ó Mídheach/Sportsfile for Web Summit Rio / Getty Images

Revolut has confirmed a new valuation of $45 billion via a secondary market share sale, shortly after the U.K.-based neobank secured its own banking license in the U.K. and Mexico.

The news positions Revolut as one of Europe’s most valuable private tech companies.

Founded in London in 2015, Revolut is one of numerous fintechs to emerge from Europe over the past decade to challenge the big bank incumbents. Revolut offers a range of services spanning multi-currency accounts, payment and transfer services, crypto products, insurance and more. The company has also expanded beyond the U.K. into international markets including Europe and the U.S.

Revolut has raised around $1.7 billion since its inception, its most recent tranche coming via a Series E of $800 million in 2021, which gave it a $33 billion valuation post-money. In the intervening years and against a backdrop of a global economic downturn, Revolut’s valuation reportedly dipped at various junctures. The speculation last year was that it may have fallen to around $20 billion.

With Revolut a private company, nothing was ever confirmed. But off the back of record profits this year and strong user growth, with customers hitting the 45 million mark, rumors emerged that the company was seeking a valuation of around $40 billion; now that’s been confirmed.

Revolut’s secondary share sale today is designed to spur “employee liquidity,” which the company says helps them to “realise their contribution to Revolut’s growth.”

“It’s their hard work, innovation, and dedication that has driven us to become the most valuable private technology company in Europe,” Revolut CEO Nik Storonsky (pictured above) said in a statement.

The secondary sale included a mix of new and existing investors, with Coatue, Tiger Global and D1 Capital Partners leading the chase.

A $45 billion valuation, alongside its recent strong financials, user metrics and newly acquired banking licenses, positions Revolut for its next phase. All eyes will be on the company’s IPO plans, with reports suggesting that it favors a U.S. listing, though the U.K. government is looking to steer it toward domestic shores.

Revolut receives long-awaited UK banking license

by with No Comment Tech

Image Credits: Revolut

Revolut has been granted a banking license from the Prudential Regulation Authority (PRA) in the U.K. This is a significant milestone for the London-based fintech company, particularly since it has been trying to secure this license since 2021.

Revolut has 45 million customers around the world, but its home market remains its most important one, with 9 million clients. The fintech also offers more products and services in the U.K. than in many other markets.

The company already has a banking license in the European Union. The Bank of Lithuania helped it get a license in 2018 and the company has been taking advantage of European passporting rules to operate in other European countries.

But the story has so far been different in the U.K. Not having a banking license in its home country has hindered the company’s capabilities when it comes to offering credit products (personal loans, credit cards, etc.) there and controlling a bigger chunk of its infrastructure.

“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 U.K. customers,” Revolut’s co-founder and CEO, Nik Storonsky, said in a statement.

Things aren’t going to change overnight for Revolut’s customers. The company says that the PRA has granted an authorization with restrictions, and Revolut is entering the so-called “mobilisation” stage. Other challenger banks, like Monzo and Starline, have been through the same process in the past.

According to the Bank of England, this mobilization phase can last a few months but shouldn’t take longer than 12 months. The most important restriction during that stage is that the bank cannot hold more than £50,000 in total customer deposits.

The PRA has granted a license to a subsidiary of Revolut Group Holdings Ltd, so the company isn’t going to transfer its U.K.-based customers to this new subsidiary just yet. Instead, the company will keep operating as an e-money institution regulated by the Financial Conduct Authority.

In its latest annual report, Revolut reported $2.2 billion in revenue in 2023 (£1.8 billion). More importantly, the company managed to generate $545 million in pre-tax profit (£438 million).

This was the first time in the last three years that the company published its audited annual results before the deadline. In other words, Revolut is growing up and becoming a more transparent company on the financial front. That must have contributed to today’s decision from the Prudential Regulation Authority.