Bailey thwarts Reeves in row over Revolut

Telegraph

2 days ago

Andrew Bailey blocked an attempt by Rachel Reeves to set up a meeting between Britain's most valuable fintech company and City regulators.
The Governor of the Bank of England intervened owing to concerns about Revolut's summit with the Prudential Regulation Authority (PRA), which was set up to discuss the fintech giant becoming a fully-fledged bank.
The Chancellor tried to arrange the meeting as part of her attempts to persuade the $65bn (£56bn) UK-based company to list in London instead of New York.
It comes after Nikolay Storonsky, Revolut's chief executive, criticised Britain's 'extremely bureaucratic regulator'.
Mr Bailey's intervention, which led to the meeting being cancelled, came amid concerns that the Bank was at risk of political meddling, according to the Financial Times.
Revolut is still attempting to become a full-service bank in the UK, a year after it was finally granted a provisional banking licence after a three-year wait.
The clash comes after Mr Bailey has issued a series of vocal rebukes of the Chancellor's policies in recent weeks, including her pension reforms and deregulation drive.
He openly opposed Ms Reeves's proposed 'backstop' power to mandate pension schemes to invest in British assets just days after the plans were unveiled, saying: 'I do not support mandating. I don't think that's appropriate.'
While Mr Bailey was not going to attend the meeting with Revolut, it is understood that officials in the PRA, which is an arm of the Bank, were.
Revolut was forced to wait three years for a limited licence after regulators raised questions about its accounts. Auditors had flagged concerns in 2021 after they were unable to verify roughly two thirds of the fintech's revenues.
Officials at the Bank of England had initially told Treasury staff they intended to reject the licence application. However, negotiations subsequently resumed, with the Bank insisting on a clean set of accounts and simplified shareholder structure before granting the initial licence last July.
Revolut is currently in the Bank's 'mobilisation' stage, which prevents it from holding more than £50,000 in deposits. Full authorisation – which would allow it to make loans and hold protected deposits – can take several months but is meant to take no more than a year.
'Regulators killing the City'
Andrew Griffith, the shadow business secretary, who as City minister in the last Tory government clashed publicly with financial regulators, said he sympathised with Ms Reeves.
He said: 'Anyone in business knows that culture beats strategy.
'It is the deep-seated culture of risk aversion by regulators which is killing the City. If this Revolut story is true, the Chancellor should use this to double down on regulatory reform.'
Mr Bailey was asked by MPs last week if he agreed with the Chancellor's recent claim that regulation is 'the boot on the neck' of business.
'I do not use those terms,' he said. 'There are areas where we clearly should look at [revising regulations]. But we cannot compromise on basic financial stability, that would be my overall message.'
Mr Bailey specifically warned Ms Reeves against relaxing so-called ring-fencing rules, which divide retail banking from the risky world of investment banking.
The Chancellor last week announced the ring-fencing regime would be 'reformed' as part of her overhaul.
She has instructed Emma Reynolds, the current City minister, to review the policies.
However, Mr Bailey said: 'The ring-fencing regime is an important part of the structure of the banking system.'
One Bank source said: 'If [Bailey] is not reminding people that financial stability is good, then who will?'