Revolut weighs buying US bank to get licence
Acquisition would be faster route for fintech to start lending in US than applying for permit of its own
Revolut is weighing buying a US lender in a bid to get an American banking licence rapidly, as the UK’s biggest fintech continues its wait to clinch a similar accreditation in its home country.
The fintech was considering acquiring a nationally chartered bank in a move that would allow it to lend in the US, two people familiar with the matter told the Financial Times.
The people said an acquisition would allow Revolut to expand in the US more quickly than if it were to apply for a banking charter by itself, and that it would potentially target a cheap bank that already holds a national licence.
Revolut is one of several European fintechs hoping to expand into the US market. The large American market provides access to fresh customers and potentially significant deposits at a time when many British fintechs are winning customers at a slower rate than before.
Revolut has made no firm decision on buying a US bank, and was also considering applying for a banking licence in its own right rather than acquiring one through a takeover, said another person familiar with the matter.
The deregulatory agenda of US President Donald Trump had created a perception that the Office of the Comptroller of the Currency, the regulator, would speed up the process for awarding bank charters, the person added.
Revolut, which has 60mn customers globally, is discussing a $1bn deal that would include raising funds and give it a valuation of about $65bn, the FT reported this month. Part of that funding would help finance its global expansion.
Revolut had also considered similar plans to buy a Middle Eastern bank as part of its global ambitions, said another person familiar with the matter.
The fintech, founded in 2015, snapped up Argentine bank Cetelem from BNP Paribas last month.
Revolut declined to comment.
The fintech already has licences in Lithuania, allowing it to trade as a bank across the EU, and Mexico. It has always hoped that becoming a fully operational bank in the UK would make it easier to get licences approved by regulators in other countries.
But it is yet to gain authorisation to operate as a fully fledged bank in the UK.
After a three-year process, its application for a UK banking licence was approved last year, with restrictions imposed until it met conditions set by regulators. But, 12 months later, Revolut still faces restrictions on lending in the UK.
The licence approval triggered a “mobilisation” stage during which time Revolut’s banking division has been allowed to accept deposits of only £50,000 while the company builds out its IT infrastructure, risk controls, compliance functions and other systems.
The Bank of England’s Prudential Regulation Authority has said the mobilisation phase for a newly licensed bank “cannot continue indefinitely and should take no longer than 12 months”, a threshold passed by Revolut last week. Despite this, the PRA said “there may be some circumstances that are beyond a new bank’s control”, which meant that it was in the mobilisation stage for longer.
Chancellor Rachel Reeves tried to set up a meeting between the Treasury, the PRA and Revolut to discuss the licence before the idea was rebuffed by BoE governor Andrew Bailey amid concerns that the bank’s regulation should be independent, the FT reported this week.
One of the people familiar with the matter said there was no “deadline” to become fully authorised and that the company did not expect its approval to be revoked. Revolut is much larger than most newly licensed banks, meaning its authorisation would inevitably take longer, the person added.