Revolut has entered into an agreement with its largest investor, SoftBank, to simplify the fintech's ownership structure, paving the obstacles towards obtaining a banking license in the United Kingdom, Financial Times reported.
UK Baning Lincese in Sight
The London-headquartered fintech applied for the UK banking license in 2021. However, despite the long delay, there is no sign for the fintech to receive the much-anticipated license. Although Revolut operates in the European Union with a Lithuanian banking license, it cannot use that as a substitute instead of a license for the UK, its largest market, following Brexit .
The Bank of England made Revolut's six classes of shares as one of the roadblocks against granting a banking license. The fintech had many share classes due to its numerous funding rounds.
A Long Negotiation with Investors
According to the three anonymous sources of the report, Revolut and Softbank have been discussing the ownership change for months, initially codenamed "Project Swan". The Japanese investor demanded hefty compensation in exchange for its priority class of shares. The report detailed that Softbank initially demanded twice the amount of common stocks to give up its preferential rights.
The agreement between the two firms does not include any new issuance of "top-up" shares for SoftBank. Further, it will not have any financial impact on the company.
Apart from Softbank, other investors of Revolut, including Tiger Global Management, venture capital firm TCV, Balderton Capital, and Ribbit Capital, have either agreed or are in talks to transfer their preferential shares in a single class.
Revout currently operates in the UK with a payments license obtained from the Financial Conduct Authority (FCA), which also needs to sign off the approval for its banking license. If the banking license is approved, Revolut can expand into lending products and offer protection of customers' funds under the UK's deposit insurance scheme.
The UK fintech is additionally seeking a banking license in the United States. However, a recent report revealed that the fintech is yet to formally submit its application for the banking charter in the country.
Meanwhile, the FCA is investigating Revolut for allegations that it permitted funds to be withdrawn from accounts that had been flagged as suspicious by the National Crime Agency, Finance Magnates reported.
