LONDON, April 6 (Reuters) – After the accuracy of Revolut Ltd.’s accounts drew scrutiny from regulators, the agency’s plan to safe a U.Ok. banking licence is dealing with delays, in keeping with two folks conversant in the corporate.
Final month, audit agency BDO issued a so-called certified opinion for Revolut’s 2021 accounts. Whereas BDO stated Revolut’s monetary statements gave a “true and truthful view of the state of the group,” it cautioned in the identical submitting that some info associated to revenues might have been “materially misstated.”
Media protection of BDO’s warning on March 1 prompted quick questions from monetary regulators, a March 6 letter to Reuters from Revolut reveals. Within the letter, Revolut requested adjustments to Reuters’ article on the monetary statements, which the information company declined to make. Revolut’s lead counsel for disputes and investigations, Conal McFadyen, stated the agency “had a number of enquiries from our regulators within the U.Ok. and abroad” looking for additional clarification concerning the auditor’s opinion.
He added that there is no such thing as a query over the totality of Revolut’s earnings.
The letter didn’t tackle the banking licence utility nor its standing.
The priority from regulators round BDO’s warning will in all probability decelerate the approval for its banking licence, in keeping with one individual conversant in Revolut, who has been advising the corporate on technique.
BDO’s warning over the accounts “casts a shadow on the board and reveals a breakdown of belief between the auditor and the administration,” stated Stephen Kingsley, a veteran non-executive director who has chaired a lot of audit committees at monetary corporations. “I might be astonished if the regulators go forward with the banking licence,” he added.
A spokesman for Revolut stated the corporate doesn’t touch upon ongoing regulatory purposes.
“We’re on the very remaining stage of the method,” Chief Monetary Officer Mikko Salovaara informed Reuters on March 1 as the corporate launched its 2021 earnings.
The Financial institution of England’s Prudential Regulatory Authority and the Monetary Conduct Authority declined to touch upon the standing of the applying.
A spokeswoman for BDO declined to remark.
Revolut utilized for a banking licence about two years in the past. Requirements for acquiring one are excessive and require the approval of the Financial institution of England and the Monetary Conduct Authority.
With a banking licence, Revolut would develop into a extra established participant within the U.Ok. banking market and have the ability to draw extra prospects. Crucially, the deposits held on the fintech can be protected by the U.Ok.’s monetary compensation scheme, boosting belief amongst purchasers.
UNDER SCRUTINY
Banking regulators in all places are scrutinizing the monetary well being of lenders after the failure of some U.S. banks and Credit score Suisse’s rescue by UBS. That elevated scrutiny is holding up Revolut’s approval, one individual concerned in discussions with U.Ok. supervisors informed Reuters.
The financial institution runs sparked issues concerning the sector’s solidity, rattling depositors.
Revolut sought to reassure its traders concerning the soundness of its enterprise after the 2021 accounts had been revealed, in keeping with a number of different folks with data of the state of affairs, who additionally spoke on situation of anonymity.
Within the March 6 letter to Reuters, Revolut’s McFadyen acknowledged the jittery temper, saying, “We’ve got obtained a lot of messages from traders expressing issues and requiring explanations from us concerning our accounts.”
Revolut additionally informed a British financial institution that works with the agency that BDO’s incapability to confirm sure income was because of the inadequacy of the audit agency’s programs, one supply stated. BDO declined to remark.
Revolut is now contemplating altering its auditor and hiring a much bigger accounting agency, one other one among its traders was informed.
BDO earned 4.5 million kilos in charges for auditing Revolut’s accounts, the agency’s monetary statements present.
Since its 2015 debut, Revolut has raised about $1.7 billion from SoftBank and different traders, and posted its first full-year revenue of 26 million kilos in 2021.
Revolut in current weeks informed its backers that it would not want to lift additional funds, a number of traders stated. Reuters couldn’t set up whether or not the feedback dated from after the collapse of Silicon Valley Financial institution within the U.S. in early March which prompted some depositors elsewhere to maneuver their money to larger lenders.
Revolut’s present principal supervisor, the Financial institution of Lithuania, which regulates Revolut’s operations throughout the European Union, stated final month in response to questions on BDO’s opinion, that whereas the U.Ok. entities do not fall below its direct supervision, it is monitoring the agency.
The central financial institution stated it had nothing additional so as to add when contacted on April 5.
Reporting by Stefania Spezzati, Amy-Jo Crowley
Extra reporting by Elizabeth Howcroft in London; modifying by Elisa Martinuzzi and Anna Driver
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