Revolut and SoftBank reach an agreement to streamline ownership, clearing the path for Revolut’s pursuit of a UK banking license.
According to Financial Times, Revolut and SoftBank, its biggest investor, have reached an agreement to streamline the fintech’s ownership structure and remove barriers to acquiring a UK banking licence.
UK Prohibiting Lincese in Public
The fintech company based in London submitted an application for a UK banking licence in 2021. Nevertheless, there is no indication that the fintech will obtain the much anticipated licence, even after the protracted wait. Revolut has a banking licence from Lithuania to operate in the EU, but because of Brexit, it is unable to utilise that licence in place of one for the UK, which is its biggest market.
Revolut’s six classes of shares were established by the Bank of England as a barrier to the issuance of a banking licence. The fintech’s multiple investment rounds resulted in a large number of share classes.
An Extended Discussion with Investors
The report’s three anonymous sources claim that Revolut and Softbank have been debating the ownership transition—originally dubbed “Project Swan”—for months. The priority class of shares was required by the Japanese investor in exchange for a substantial payout. According to the article, Softbank first requested twice as much common stocks as it would have to give up its preferential rights.
There will be no additional “top-up” share issuance for SoftBank under the terms of the agreement between the two companies. Moreover, it won’t affect the company’s finances in any way.
Other than Softbank, Revolut’s backers Tiger Global Management, TCV, Balderton Capital, and Ribbit Capital have all agreed to transfer their preferred shares in a single class or are in discussions to do so.
Currently, Revout is able to conduct business in the UK thanks to a payments licence that it got from the Financial Conduct Authority (FCA), which also has to approve its banking licence. Revolut can enter the loan products market and provide deposit insurance coverage for its customers if the banking licence is granted.
In addition, the fintech company from the UK is applying for a banking licence in the US. But according to a recent source, the fintech has not yet officially submitted its application for the nation’s banking licence.
According to Finance Magnates, the FCA is looking into claims made by Revolut that it allowed money to be taken out of accounts that the National Crime Agency had identified as suspicious.
