SoftBank snag as Revolut fights for licence

REVOLUT is locked in a fight with major shareholder SoftBank in the latest obstacle in its battle to secure a UK banking licence, it was reported last night.

The fintech firm has been told by regulators it must simplify its ownership structure in order to win the licence.

But Japanese conglomerate SoftBank, a major investor, is said to have demanded compensation in return for giving up the priority class of shares it controls.

The Bank of England’s Prudential Regulation Authority (PRA) has told Revolut it must collapse its six classes of shares into one, according to The Financial Times.

But while most investors have agreed to swap their holdings for ordinary shares, SoftBank is reportedly asking for twice the amount of stock Revolut is offering in exchange for giving up its preferential rights.

It comes as regulators are under increasing pressure to decide the company’s future. The London-based firm has been seeking a UK banking licence for more than two years.

The application has become increasingly mired in controversy amid growing frustration at Revolut over the drawn-out process. One City analyst warned there was now ‘a lot of pressure on regulators’ and urged them to be ‘very careful’. Licence applications need to be approved by two regulators – the Financial Conduct Authority (FCA) and the PRA. Rivals Monzo and Starling have secured licences and the process usually takes about a year.

But Revolut’s chances suffered a setback in early March when its auditor said parts of its overdue accounts were ‘materially misstated’.

At the time, the company insisted it would still be granted a licence ‘imminently’, possibly within days, but nearly three months later it is still waiting.

In the meantime, finance chief Mikko Salovaara has stepped down for ‘personal reasons’ while other senior figures have also left. Speculation over its fate intensified this week when it emerged the PRA had told the Treasury it was minded to reject its application for a banking licence.

Failure to get a licence from its home regulators could seriously dent its ambitions to expand overseas. Revolut is understood to have offered to withdraw from the UK, asking regulators if it was not wanted here. But it got reassurances that its application was still being considered.

Gary Greenwood, investment analyst at Shore Capital, said: ‘There is a lot of pressure on regulators if this goes wrong, so they need to be very careful.’

The Bank and the FCA declined to comment on the application process. A Revolut spokesman said: ‘We do not comment on ongoing regulatory applications.’