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CNBC
5 hours ago
- Business
- CNBC
Why Revolut's journey to become a UK bank is taking so long
LONDON — A year on from securing its initial U.K. bank license, Revolut is still awaiting full authorization from regulators. The fintech giant was granted a banking license with restrictions in July 2024 from the U.K.'s Prudential Regulation Authority (PRA), bringing an end to a years-long application process that began back in 2021. The PRA is a unit of the Bank of England. This key victory moved Revolut into what's known as the "mobilization" phase of a company's journey toward becoming a full-fledged bank. During this period, firms are limited to holding only £50,000 of total customer deposits — well below the hundreds of billions of pounds customers deposit with major high street lenders such as Barclays, HSBC and Santander. Revolut customers in the U.K. are also still served by the company's e-money unit, instead of its banking entity. This means they are not directly insured by the Financial Services Compensation Scheme, which protects customers up to £85,000 if a firm fails. Roadblocks and the sheer size of Revolut are among the many reasons why the firm's bank authorization process is taking longer than expected, analysts told CNBC. Revolut is currently still awaiting its consumer credit license, which would enable it to offer credit cards and other services in the U.K. Meanwhile, the Financial Times reported Tuesday that a meeting arranged by British Finance Minister Rachel Reeves with Revolut and the PRA was cancelled after an intervention from Bank of England Governor Andrew Bailey. CNBC was unable to independently verify the report. The BOE declined to comment and the Treasury did not immediately respond to CNBC's request for comment. A spokeswoman for Revolut said that while the firm was unable to comment on specifics, the company remains on track to launch a fully regulated U.K. bank this year. "We are progressing through the final stages of mobilisation and continue to work constructively with the PRA," she told CNBC via email. "Given Revolut's global scale, this is the largest and most complex mobilisation ever undertaken in the UK. A thorough review is an expected part of the process and getting this right is more important than rushing to meet a specific date." Barney Hussey-Yeo, CEO of fintech firm Cleo, said that "anti-growth regulatory posture" from the U.K. was likely a contributing factor in the delays to Revolut exiting its mobilization phase. "Revolut is already a regulated bank in over 30 countries, including some of the toughest jurisdictions in the world," he told CNBC, noting the company is worth more than some major U.K banks on a rumored $65 billion valuation. "If that's not enough scale or rigour for the PRA, it raises serious questions about the UK's regulatory expectations — because they now look excessive," Hussey-Yeo added. Regulators are nervous about getting it wrong due to the lingering "scar tissue" of the 2008 financial crisis, said Simon Taylor, head of strategy at fraud prevention platform Sardine AI. "The U.K. has historically had one of the single most risk-averse regulatory postures in the world when it comes to capital requirements, especially," he told CNBC. Another factor at play is Revolut's size. No other firm has entered the mobilization phase of bank authorization with more than 500,000 customers. Revolut serves over 10 million customers in the U.K. Once it exits the mobilization phase, Revolut would need to gradually start migrating customers to its U.K. banking entity — a significant undertaking. This, coupled with Revolut's already lengthy history in the U.K. market and complaints over fraud, makes it a "complex player to authorize," according to Taylor. "A lot of the larger banks historically complained about Revolut being a major source of their fraud risk," he told CNBC. "My guess is that these complaints and issues have shown up in the BoE's regulatory reports, and they have material, well grounded concerns." Still, Taylor conceded that Revolut has "some of the most sophisticated technology to detect and prevent these issues, and has been at the front line of dealing with the scams issue." Ensuring Revolut obtains full authorization to operate a bank is important for the U.K. government — particularly as it faces criticisms from the tech industry that changes to the non-domicile tax status, along with increased taxes on capital gains, have created a hostile environment for entrepreneurs. "Every element of wealth capture for the U.K. — jobs, taxes, equity gains — has been eroded," Cleo's Hussey-Yeo said, adding that there was a heightened risk that richly valued fintechs like Revolut could move their global headquarters outside of the U.K. if such measures continue. Taylor said Revolut receiving full bank authorization "would be a massive symbolic win" for the government. "The Chancellor [of the Exchequer] cannot afford to lose Revolut to another jurisdiction — but Revolut looks at a global market and sees lots of willing suitors for its business, and very little willingness from the U.K.," he told CNBC.
Yahoo
17-07-2025
- Business
- Yahoo
Exclusive-Bank of England scrutinizes lenders for dollar risk amid Trump worries, sources say
By Stefania Spezzati, Jesús Aguado and Lawrence White LONDON (Reuters) -The Bank of England has asked some lenders to test their resilience to potential U.S. dollar shocks, three sources said, the latest sign of how the Trump administration's policies are eroding trust in the U.S. as a bedrock of financial stability. As the leading currency for global trade and capital flows, the U.S. dollar is the lifeblood of global finance. However, President Donald Trump's break from long-standing U.S. policy in areas such as free trade and defence has forced policymakers to consider whether the emergency provision of dollars in times of financial stress can still be relied on. Following similar demands from European supervisors, the Bank of England, which oversees banks in the City of London financial hub, has requested that some lenders assess their dollar funding plans and the degree to which they depend on the U.S. currency, including for short term needs, one of the people told Reuters. In one instance, one global bank based in Britain was asked in recent weeks to run stress tests internally, including scenarios where the U.S.-dollar swap market could dry up entirely, another of the sources said. The BoE's supervisory arm, the Prudential Regulation Authority (PRA), made the requests individually to some of the banks, the person added. No bank could withstand such a shock for more than a few days, according to one of the sources, given the dominance of the dollar in the global financial system and lenders' dependence on it. Should dollar borrowing become harder to obtain and more expensive for banks, it could hamper their ability to carry on meeting demands for cash. Ultimately, a bank that struggles to gain access to dollars could fail to meet depositor requests, undermining confidence and triggering further outflows. While this scenario is seen as extreme and unlikely, regulators and banks are no longer taking dollar access for granted. A spokesperson for the Bank of England declined to comment for this article. Representatives for the biggest UK banks with international businesses including Barclays, HSBC and Standard Chartered also declined to comment. Global banks have significant dollar exposure in their balance sheets, making them vulnerable to potential funding shocks. While the U.S. Federal Reserve has said that it wants to continue to make dollars available in the financial system, Trump's policy shifts have prompted European allies to reexamine their dependence on Washington. Meanwhile, Trump's repeated criticism of Fed chair Jerome Powell and reports the central bank chief may get fired are raising concerns of a loss of independence at the Fed and the repercussions on the dollar. The multi-trillion-dollar swap market is a critical part of the international financial system used by firms including banks to exchange other currencies for dollars to manage liquidity needs across their global networks. According to a study by the Bank for International Settlements, at the end of 2024 the notional value of currency derivatives globally was $130 trillion, 90% of which involved the U.S. dollar. A typical day sees almost $4 trillion in new FX swap contracts, according to BIS. Global banks can tap U.S. dollar deposits to withstand temporary shortfalls, one of the sources said. But regulators worry that international banks remain exposed to dollar risk, one of the people said. One of the sources told Reuters that bank leaders are particularly concerned about whether the Fed would support a mid-sized non-U.S. bank if it were to run into dollar shortage issues, where, in the past, such backing was assumed as guaranteed. The Fed has lending facilities with the European Central Bank, Bank of England and other major counterparts to alleviate shortages of the global reserve currency and to keep financial stress from spilling over into the United European central banking and supervisory officials for months have been questioning whether they can still rely on the Fed, as Reuters has previously reported. ECB supervisors have since asked some of the region's lenders to assess their need for U.S. dollars in times of stress, as they game out scenarios in which they cannot rely on tapping the Federal Reserve under the Trump administration. Earlier in June, the Swiss National Bank warned that "some banks may also face the risk of liquidity shortfalls in foreign currencies" in their balance sheets. The BoE has in the past asked banks how they would ensure a supply of dollars during times of stress, as in a 2019 system-wide check on banks' liquidity during a crisis, but the renewed focus on the U.S. currency showed how Trump's actions have revived such concerns. Reuters couldn't establish whether dollar shocks would be part of the stress test for the industry which the BoE runs every other year and whose results are expected later in 2025. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Reuters
17-07-2025
- Business
- Reuters
Exclusive: Bank of England scrutinizes lenders for dollar risk amid Trump worries, sources say
LONDON, July 17 (Reuters) - The Bank of England has asked some lenders to test their resilience to potential U.S. dollar shocks, three sources said, the latest sign of how the Trump administration's policies are eroding trust in the U.S. as a bedrock of financial stability. As the leading currency for global trade and capital flows, the U.S. dollar is the lifeblood of global finance. However, President Donald Trump's break from long-standing U.S. policy in areas such as free trade and defence has forced policymakers to consider whether the emergency provision of dollars in times of financial stress can still be relied on. Following similar demands from European supervisors, the Bank of England, which oversees banks in the City of London financial hub, has requested that some lenders assess their dollar funding plans and the degree to which they depend on the U.S. currency, including for short term needs, one of the people told Reuters. In one instance, one global bank based in Britain was asked in recent weeks to run stress tests internally, including scenarios where the U.S.-dollar swap market could dry up entirely, another of the sources said. The BoE's supervisory arm, the Prudential Regulation Authority (PRA), made the requests individually to some of the banks, the person added. No bank could withstand such a shock for more than a few days, according to one of the sources, given the dominance of the dollar in the global financial system and lenders' dependence on it. Should dollar borrowing become harder to obtain and more expensive for banks, it could hamper their ability to carry on meeting demands for cash. Ultimately, a bank that struggles to gain access to dollars could fail to meet depositor requests, undermining confidence and triggering further outflows. While this scenario is seen as extreme and unlikely, regulators and banks are no longer taking dollar access for granted. A spokesperson for the Bank of England declined to comment for this article. Representatives for the biggest UK banks with international businesses including Barclays (BARC.L), opens new tab, HSBC (HSBA.L), opens new tab and Standard Chartered (STAN.L), opens new tab also declined to comment. Global banks have significant dollar exposure in their balance sheets, making them vulnerable to potential funding shocks. While the U.S. Federal Reserve has said that it wants to continue to make dollars available in the financial system, Trump's policy shifts have prompted European allies to reexamine their dependence on Washington. Meanwhile, Trump's repeated criticism of Fed chair Jerome Powell and reports the central bank chief may get fired are raising concerns of a loss of independence at the Fed and the repercussions on the dollar. The multi-trillion-dollar swap market is a critical part of the international financial system used by firms including banks to exchange other currencies for dollars to manage liquidity needs across their global networks. According to a study, opens new tab by the Bank for International Settlements, at the end of 2024 the notional value of currency derivatives globally was $130 trillion, 90% of which involved the U.S. dollar. A typical day sees almost $4 trillion in new FX swap contracts, according to BIS, opens new tab. Global banks can tap U.S. dollar deposits to withstand temporary shortfalls, one of the sources said. But regulators worry that international banks remain exposed to dollar risk, one of the people said. One of the sources told Reuters that bank leaders are particularly concerned about whether the Fed would support a mid-sized non-U.S. bank if it were to run into dollar shortage issues, where, in the past, such backing was assumed as guaranteed. The Fed has lending facilities with the European Central Bank, Bank of England and other major counterparts to alleviate shortages of the global reserve currency and to keep financial stress from spilling over into the United States. But European central banking and supervisory officials for months have been questioning whether they can still rely on the Fed, as Reuters has previously reported. ECB supervisors have since asked some of the region's lenders to assess their need for U.S. dollars in times of stress, as they game out scenarios in which they cannot rely on tapping the Federal Reserve under the Trump administration. Earlier in June, the Swiss National Bank warned that "some banks may also face the risk of liquidity shortfalls in foreign currencies" in their balance sheets. The BoE has in the past asked banks how they would ensure a supply of dollars during times of stress, as in a 2019 system-wide check on banks' liquidity during a crisis, but the renewed focus on the U.S. currency showed how Trump's actions have revived such concerns. Reuters couldn't establish whether dollar shocks would be part of the stress test for the industry which the BoE runs every other year and whose results are expected later in 2025.
Bloomberg
15-07-2025
- Business
- Bloomberg
Top Bankers Face Looser Conduct Rules Under UK Deregulation Push
UK regulators are planning to streamline a post-crisis regime that covers the conduct of senior bankers, part of the government's efforts to ease regulations and drive growth in financial services. The Financial Conduct Authority and the Prudential Regulation Authority said in a statement Tuesday that they aim to make the so-called Senior Managers Certification Regime 'less onerous' on firms while continuing to protect consumers and markets, and the safety and soundness of businesses.
South Wales Guardian
15-07-2025
- Business
- South Wales Guardian
Bank of England to ease rules for smaller and mid-sized banks
It came as the central bank said it will push ahead with the majority of new capital rules for British banks at the start of 2027 but will delay part of the proposals. The Bank said its Prudential Regulation Authority (PRA) has pushed back the start of a new internal model approach for considering risk in the market by a year to January 1 2028. It said the latest proposals will allow time 'for greater clarity to emerge in other jurisdictions' amid uncertainty how President Trump will implement the global Basel rules in the US. The Basel 3 regime was first drawn up in the aftermath of the financial crisis to increase the amount of equity available to absorb stress from banks in an effort to avoid future state bailouts. The Bank of England said it will continue with plans to launch the majority of its modified Basel 3.1 rules at the start of 2027. It had previously delayed the start by a year in the face of uncertainty in the global financial markets. Basel 3.1 is set to promote 'banking resilience', according to the PRA, but comes as the Chancellor seeks reduce regulation in a bid to drive growth. On Tuesday, the Bank said it would also change restrictions it claims will drive growth opportunities among smaller and mid-sized banks. It will push forward with its 'strong and simple framework', which will reduce capital rules for smaller non-systemic banks and building societies, providing them with simpler restrictions than the largest UK banks. The PRA said it is also putting forward prospective plans to make it easier for mid-sized banks to compete in the mortgage market. It will publish a paper this summer with options to help-mid-sized banks grow by adjusting some barriers to securing permissions in providing residential mortgages. Sam Woods, chief executive of the PRA and deputy governor for prudential regulation at the Bank, said: 'Today's announcements will give certainty to firms of all sizes about the future capital framework, bring in a simpler regime for smaller banks, make it easier for mid-sized banks to scale up in the mortgage market, and allow an extra year for part of the implementation of new investment banking rules.' Dave Ramsden, deputy governor for markets and banking at the Bank, said: 'We have considered and reflected industry feedback in today's announcements. 'These changes are designed to foster growth and competition, recognising that smaller firms present lower risks to financial stability, whilst also maintaining size-appropriate resolvability capabilities.' The rule changes come ahead of the Chancellor's Mansion House speech to financial industry bosses, where she is expected to launch further cuts of industry red tape.
