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Exclusive: Revolut audit questions, skittish regulators make it difficult to bid for a UK licence -sources

  • BDO’s audit opinion draws regulatory scrutiny
  • Revolut changes auditor – source
  • Revolut: Company doesn’t comment upon regulatory applications

LONDON, April 6, (Reuters) – Two people familiar with the matter say that Revolut Ltd.’s plans to obtain a U.K. bank licence are facing delays.

Audit firm BDO issued a qualified opinion last month for Revolut’s 2021 accounts. BDO stated that Revolut’s financial statements provided a “true, fair view of the group’s state”, but it also cautioned in the same filing about the possibility of revenue information being “materially misrepresented.”

Revolut sent a March 6 letter from Reuters to Reuters asking for clarifications on media coverage of BDO’s March 1 warning. Revolut asked for changes to Reuters’ article about financial statements in the letter. The news agency declined. Conal McFadyen (Revolut’s lead counsel in disputes and investigations), stated that the firm had “multiple enquiries from our regulators overseas and in the U.K.” seeking clarification about the auditor’s opinions.

He said that Revolut’s total income is undisputed.

The letter did not address the status of the application for a banking licence.

According to one person familiar, the regulators’ concern about BDO’s warning will likely slow down approval for its banking license, according to Revolut. This person has been advising Revolut on strategy.

Stephen Kingsley, a non-executive director with a history of chairing audit committees at financial companies, said that BDO’s warning about the accounts “casts an shadow on the board” and “shows a breakdown in trust between the auditors and the management.” He said, “I would be shocked if regulators go ahead and license the banking bank.”

Revolut spokesperson said that the company doesn’t comment on ongoing regulatory applications.

“We are at a very final stage of this process,” Mikko Salovaara, Chief Financial Officer, told Reuters March 1, as the company released its 2021 earnings.

The Bank of England’s Prudential Regulatory Authority (BoE) and the Financial Conduct Authority both declined to comment on the status of this application.

BDO’s spokeswoman declined to comment.

Revolut applied for a bank licence two years ago. The requirements for obtaining one are very high and require approval from the Bank of England as well as the Financial Conduct Authority.

Revolut will be more established in the U.K. bank market and be able attract more customers if it has a banking license. Importantly, deposits held at the fintech will be protected by the U.K. financial compensation scheme, which increases trust among clients.


After the collapse of several U.S. banks, and Credit Suisse’s rescue attempt by UBS, banking regulators are examining the financial health of lenders around the world. One person familiar with U.K supervisors said that Revolut is being held up by increased scrutiny.

The bank runs raised concerns about the sector’s stability, rattling depositors.

According to several people familiar with the situation, Revolut tried to reassure its investors about its business’ soundness after the 2021 accounts were published. These people also spoke on condition anonymity.

McFadyen, Revolut’s CEO, acknowledged the jittery mood in a March 6 letter to Reuters. He stated, “We have received a variety of messages from investors expressing concerns, and requiring explanations from me regarding our accounts.”

Revolut also informed a British bank that works alongside the firm that BDO’s inability verify certain revenue was due in part to the inadequacy in the firm’s systems. One source said. BDO declined to comment.

Revolut is currently considering hiring an accounting firm that is larger and changing its auditor, according to another of its investors.

According to the firm’s financial statements, BDO received 4.5 million pounds in fees from Revolut for its audit of their accounts.

Revolut has raised approximately $1.7 billion from SoftBank, other investors and has posted its first full year profit of 26,000,000 pounds since 2015.

Revolut recently told its investors that it doesn’t need additional funds. Reuters could not determine whether the comments were made after the collapse Silicon Valley Bank in the U.S.A in March, which prompted some depositors to move their cash elsewhere to larger lenders.

Revolut’s current principal supervisor is the Bank of Lithuania. It regulates Revolut operations across the European Union. In response to questions regarding BDO’s opinion, the Bank of Lithuania stated last month that although the U.K. entities are not under its direct supervision, they are still being monitored by it.

When contacted by the media on April 5, the central bank stated that it had nothing more to add.

Reporting by Stefania Spezzati, Amy-Jo Crowley
Additional reporting by Elizabeth Howcroft, London; editing by Elisa Martuzzi and Anna Driver

Our Standards: The Thomson Reuters Trust Principles.

Stefania Spezzati

Thomson Reuters

Stefania is a Reuters reporter covering European investment banking. She is based in London and covers all things finance. Stefania was born in Puglia, Italy. She began her career in Milan as a financial journalist for MF-DowJones. This newswire is backed by Dow Jones, Milano Finanza and other leading financial publications in Italy. Stefania worked for Bloomberg News for about a decade before joining Reuters. She started in Milan and moved to London. She was part of an investigation that exposed how millions of pounds in taxpayer-backed loan money went to dubious data-journalist firms. The British Journalism Awards in crime journalism awarded the story the Best Story Award.
Contact: +44 7500 684790

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