LONDON, April 6 (Reuters) – After the accuracy of Revolut Ltd.’s accounts drew scrutiny from regulators, the agency’s plan to safe a U.Okay. banking licence is going through delays, in accordance with two individuals aware of the corporate.
Final month, audit agency BDO issued a so-called certified opinion for Revolut’s 2021 accounts. Whereas BDO mentioned Revolut’s monetary statements gave a “true and truthful view of the state of the group,” it cautioned in the identical submitting that some info associated to revenues could have been “materially misstated.”
Media protection of BDO’s warning on March 1 prompted speedy questions from monetary regulators, a March 6 letter to Reuters from Revolut exhibits. Within the letter, Revolut requested modifications to Reuters’ article on the monetary statements, which the information company declined to make. Revolut’s lead counsel for disputes and investigations, Conal McFadyen, mentioned the agency “had a number of enquiries from our regulators within the U.Okay. and abroad” searching for additional rationalization in regards to the auditor’s opinion.
He added that there isn’t any query over the totality of Revolut’s earnings.
The letter didn’t tackle the banking licence utility nor its standing.
The priority from regulators round BDO’s warning will most likely decelerate the approval for its banking licence, in accordance with one individual aware of Revolut, who has been advising the corporate on technique.
BDO’s warning over the accounts “casts a shadow on the board and exhibits a breakdown of belief between the auditor and the administration,” mentioned Stephen Kingsley, a veteran non-executive director who has chaired numerous audit committees at monetary corporations. “I might be astonished if the regulators go forward with the banking licence,” he added.
A spokesman for Revolut mentioned the corporate doesn’t touch upon ongoing regulatory purposes.
“We’re on the very ultimate stage of the method,” Chief Monetary Officer Mikko Salovaara informed Reuters on March 1 as the corporate launched its 2021 earnings.
The Financial institution of England’s Prudential Regulatory Authority and the Monetary Conduct Authority declined to touch upon the standing of the applying.
A spokeswoman for BDO declined to remark.
Revolut utilized for a banking licence about two years in the past. Requirements for acquiring one are excessive and require the approval of the Financial institution of England and the Monetary Conduct Authority.
With a banking licence, Revolut would change into a extra established participant within the U.Okay. banking market and be capable to draw extra clients. Crucially, the deposits held on the fintech could be protected by the U.Okay.’s monetary compensation scheme, boosting belief amongst purchasers.
UNDER SCRUTINY
Banking regulators all over the place are scrutinizing the monetary well being of lenders after the failure of some U.S. banks and Credit score Suisse’s rescue by UBS. That elevated scrutiny is holding up Revolut’s approval, one individual concerned in discussions with U.Okay. supervisors informed Reuters.
The financial institution runs sparked issues in regards to the sector’s solidity, rattling depositors.
Revolut sought to reassure its traders in regards to the soundness of its enterprise after the 2021 accounts have been revealed, in accordance with a number of different individuals with information of the scenario, who additionally spoke on situation of anonymity.
Within the March 6 letter to Reuters, Revolut’s McFadyen acknowledged the jittery temper, saying, “We’ve obtained numerous messages from traders expressing issues and requiring explanations from us relating to our accounts.”
Revolut additionally informed a British financial institution that works with the agency that BDO’s incapability to confirm sure income was because of the inadequacy of the audit agency’s programs, one supply mentioned. BDO declined to remark.
Revolut is now contemplating altering its auditor and hiring a much bigger accounting agency, one other certainly one of its traders was informed.
BDO earned 4.5 million kilos in charges for auditing Revolut’s accounts, the agency’s monetary statements present.
Since its 2015 debut, Revolut has raised about $1.7 billion from SoftBank and different traders, and posted its first full-year revenue of 26 million kilos in 2021.
Revolut in current weeks informed its backers that it does not want to boost additional funds, a number of traders mentioned. Reuters couldn’t set up whether or not the feedback dated from after the collapse of Silicon Valley Financial institution within the U.S. in early March which prompted some depositors elsewhere to maneuver their money to larger lenders.
Revolut’s present principal supervisor, the Financial institution of Lithuania, which regulates Revolut’s operations throughout the European Union, mentioned final month in response to questions on BDO’s opinion, that whereas the U.Okay. entities do not fall beneath its direct supervision, it is monitoring the agency.
The central financial institution mentioned it had nothing additional so as to add when contacted on April 5.
Reporting by Stefania Spezzati, Amy-Jo Crowley
Further reporting by Elizabeth Howcroft in London; modifying by Elisa Martinuzzi and Anna Driver
Our Requirements: The Thomson Reuters Belief Ideas.
