Andrew Bailey blocks Rachel Reeves's meeting with Revolut
The chancellor had been trying to organise a meeting between Revolut, the Treasury and the Bank's Prudential Regulation Authority division in recent weeks to discuss the fintech company's plans to start a banking business in Britain.
However, the meeting was scrapped at the behest of Andrew Bailey, the governor, over worries it represented political interference in the Bank's independent oversight of the City.
The incident, which was first reported by the Financial Times, adds to evidence of a growing rift between the Treasury and Britain's regulators.
• Pound weakens to lowest in three months against dollar
Reeves has placed cutting red-tape on the financial services sector and other industries at the heart of her mission to turbocharge the UK's faltering economy and has blamed over-cautious watchdogs for holding back growth.
This month she set out a package of reforms to loosen the rules on financial firms and also used strident language to urge watchdogs to go further, claiming in a speech to City grandees at Mansion House that 'in too many areas, regulation still acts as a boot on the neck of businesses, choking off the enterprise and innovation that is the lifeblood of economic growth'.
Bailey has signalled his unease with Reeves's comments, however. When asked by MPs on the Commons treasury committee last week about the chancellor's 'boot' remark, the governor said: 'I don't use those terms, let me say that'. He also warned that 'we cannot compromise on basic financial stability, that would be my overall message'.
The privately-owned Revolut is seen as the crown jewel of Britain's fintech industry. Founded only a decade ago as a foreign exchange and money transfer business, it has become a sprawling company offering everything from crypto trading to share dealing.
It was recently valued at $45 billion, employs more than 10,000 staff and last year generated pre-tax profits of £1.1 billion.
Yet its growth ambitions have been hampered by the Bank's caution in granting it a banking licence. The London-based group first applied for a UK licence in early 2021 but a process that typically takes 12 months lasted more than three years for Revolut.
The delay was partly caused by questions about the company's accounts after BDO, which is the fintech's group's external auditor, raised concerns in Revolut's 2021 annual report about £477 million of Revolut's £636 million in annual revenues that year.
This issue has since been resolved, paving the way for Revolut to secure a licence a year ago. However, it has yet to start its banking business here because it is not fully approved by the Bank. Instead it currently has restricted authorisation, which effectively only allows it to build and test its systems.
It already offers some banking services in the European Union thanks to a licence it has from Lithuanian authorities.
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