Revolut nears completion of 2021 accounts as fintech seeks UK license – sources

LONDON, Jan 13 (Reuters) – Fintech firm Revolut Ltd. is close to completing its extended financial statements for 2021, a move that could pave the way for the startup to obtain a British banking license, two people with knowledge of the matter told Reuters.

Revolut is set to publish financial statements for the year ended December 2021 – due last summer – in late January following audit firm BDO LLP’s final sign-off, the people said. BDO and Revolut plan to meet on Jan. 26, the people said.

Founded by Nikolay Storonsky, a former derivatives trader at Credit Suisse Group AG and Lehman Brothers, and software developer Vladyslav Yatsenko in 2015, Revolut launched as a prepaid card that charges foreign exchange fees that undercut established banks.

It was valued at around $33 billion in its last known funding round in 2021, making it Britain’s most valuable startup.

The audit firm’s sign-off comes after months of delays.

The Financial Times reported in September that the Financial Reporting Council (FRC), a UK body responsible for regulating auditors, found Revolut’s BDO audit “inadequate” and said the “risk of undetected material misstatement was unacceptably high”.

The watchdog’s scrutiny of the 2020 audit held up approval of Revolut’s 2021 accounts, one of the people said. Revolut will retain BDO for the 2022 audit, the person said.

Representatives for BDO, the FRC and the Bank of England’s Prudential Regulatory Authority, which approves banking licences, declined to comment.

The Revolut filing is likely to show an increase in 2021 revenue from customer subscriptions and exchange rate fees, the person said. It is unclear how profitable the company will be after losing £200m the previous year.

Storonsky said in November that the firm was profitable and that it did not need to raise additional funds.

The accounts could help the entrepreneur convince UK regulators that Revolut is ready for a banking license after a two-year wait.

To win it, Revolut also needs the consent of the Financial Conduct Authority (FCA), according to regulatory guidelines.

Revolut is likely to opt for a “restricted authorization”, where it will operate with restrictions on customer deposits before becoming fully operational as a bank after a trial period, the same person said.

It won’t be the first startup to go that route.

Starling Bank and Monzo were also granted banking licenses with restrictions in 2016. For Monzo, it took around eight months to have the restrictions lifted. The UK is a key market for Revolut, which aims to become a global financial firm. The company already uses its Lithuanian license as a passport into the EU.

Reporting by Stefania Spezzati; Editing by Elisa Martinuzzi and Tomasz Janowski

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