Latest news with #AndrewBailey
Daily Mail
9 hours ago
- Business
- Daily Mail
Revolut eyes US expansion amid clash between Chancellor and the Bank of England over its UK licence
Revolut wants to expand in the US amid tensions between the Chancellor and the Bank of England over its plans in the UK. The British fintech firm is reportedly weighing up buying an American lender to allow it to operate in the US as the wait for full authorisation in the UK drags on. Revolut's application for a UK banking licence was approved in 2024 after a three-year delay, but it still faces restrictions on lending. It emerged this week that Bank of England governor Andrew Bailey blocked Rachel Reeves from brokering a meeting with regulators and Revolut to help the company secure a full licence. She had tried to set up talks between the fintech, the Treasury and the Prudential Regulation Authority, which is an arm of the Bank. Bailey had concerns that the Bank's regulatory activities should be independent from political interference, the Financial Times reported. Revolut and the Bank declined to comment. The Treasury has been contacted. The US market would provide access to a large pool of customers and potentially higher deposits.
Yahoo
14 hours ago
- Business
- Yahoo
Rachel Reeves and Andrew Bailey clash over blocked Revolut meeting
The governor of the Bank of England has reportedly blocked a meeting planned by Chancellor Rachel Reeves to address the regulation of Revolut, in a sign of potential friction between the Government and the central bank. The Chancellor had sought to set up a three-way meeting for Treasury officials, the fintech business and the Bank of England's Prudential Regulation Authority, with regulates UK banks. It is understood the Chancellor is pushing for Revolut to be fully authorised as a bank as soon as possible, after receiving initial approval last year. However, the Financial Times reported the meeting was scrapped by Governor Andrew Bailey due to concerns of political interference in the central bank's oversight process. The incident, which took place in recent weeks according to the publication, contributes to speculation of a growing rift between the Treasury and regulators. Ms Reeves is currently pushing forward with reforms designed to loosen the rules on financial firms, in a move which will increase risk-taking in the sector. The 'Leeds reforms', unveiled in the West Yorkshire city earlier this month, are set to be the biggest set of changes to financial services for more than a decade, according to the Government. Labour is hoping that cutting red tape in the financial services sector and other industries can help accelerate growth in the economy. In her annual Mansion House speech to the financial services sector earlier this month, she urged regulators to resist 'excessive caution'. She added: '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 growth.' Shortly after the meeting, Mr Bailey said 'I don't use those terms' when asked about Ms Reeves's remarks on regulation. He also said: 'We cannot compromise on basic financial stability, that would be my overall message.' Last year Revolut was approved for a UK banking licence after a lengthy process with regulators, however its banking division still has a limit on deposits it can receive until it receives full approval from regulators. The Bank of England declined to comment. The Treasury has been contacted for comment. Sign in to access your portfolio
The Guardian
18 hours ago
- Business
- The Guardian
Bank of England governor blocks Rachel Reeves's Revolut meeting
The governor of the Bank of England blocked a meeting that Rachel Reeves tried to secure with watchdogs and Revolut, amid concerns the chancellor was meddling in an independent process over the fintech's UK banking licence. Andrew Bailey intervened after learning of the plan to bring together representatives from Revolut, the Treasury and the Bank's regulatory arm, the Prudential Regulation Authority, to discuss the fintech's ambitions to become a fully authorised UK bank. The three-way meeting, first reported by the Financial Times, had been due to take place in the past few weeks but was cancelled over concerns that the central bank's regulatory decisions should be independent from government interventions and influence. A Treasury spokesperson said: 'The chancellor and the governor have a strong and productive relationship, and the government fully supports the operational independence of the Bank of England.' The Bank declined to comment. The meeting would have been part of the government's charm offensive, with ministers desperate to convince Revolut – last estimated to be worth $45bn (£33.6bn) – to choose London for its much-awaited stock market debut primary listing. Ministers have been spooked by comments from Revolut's co-founder and chief executive, Nik Storonsky, who suggested last December that New York could be a better fit because of the regulatory environment and the size of the market. Losing Revolut, which is Europe's most valuable private fintech, would represent a major blow to the City and the London Stock Exchange, which has suffered from a growing number of defections, with companies snubbing the UK for listings abroad. The chancellor has also been urging UK watchdogs to support financial firms in the name of growth, having gone so far as to claim in her Mansion House speech this month that regulation was acting as a 'boot on the neck' of businesses. Revolut secured a limited UK banking licence last year, after a rare three-year wait, having had to convince regulators that the company had addressed a number of accounting issues and EU regulatory breaches, as well as reputational concerns, including an overaggressive corporate culture. The fintech company says it has since resolved those accounting and regulatory problems, and has made efforts to improve its working culture. However, the fintech was only granted a restricted licence and, 12 months on, has yet to have its application fully authorised. The restrictions mean it cannot currently offer its own loans in the UK, and while it can hold customer deposits, they are capped at £50,000. Banks are usually put under these restrictions until they can prove they have appropriate staff, IT systems and governance and accountability checks in place to satisfy officials. Revolut has been hoping to gain full approval from UK regulators this year. A fully fledged licence would open the door to new income streams, as being able to hold customer deposits would allow it to start funding own-branded loans and mortgages. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion It would also mean it face stricter regulations and make it part of the compensation scheme. A full licence was expected to be the first step in open the door to banking licences in other countries, including the US. Revolut has already secured an EU banking licence through Lithuania. However, in the absence of UK approvals, it has emerged that Revolut is considering buying an American bank in order to secure an American banking licence and accelerate its expansion stateside. The fintech company originally launched as a pre-paid card focused on free currency exchange for customers. It has since grown to more than 10,000 staff, serving customers in more than 36 countries, with more than 50 products and services. As well as money transfers, it offers home rentals, buy now, pay later credit, wage advances, e-sims for mobile data plans and crypto trading. Its annual report in April showed Revolut more than doubled its annual profits in 2024, jumping almost 150% to £1bn, thanks to a rise in subscriptions, and revenues from its wealth and crypto trading divisions.
Times
20 hours ago
- Business
- Times
How tensions between Rachel Reeves and Andrew Bailey boiled over
In January this year Rachel Reeves and Andrew Bailey, governor of the Bank of England, headed to Beijing on a joint mission to promote the UK as open to business for the world's second largest economy. The China trip was a testament to Reeves and Bailey's close co-ordination as heads of the UK's fiscal and monetary policies respectively — a stark contrast to the relations between the Treasury and Threadneedle Street under the short-lived tenure of Liz Truss and her chancellor Kwasi over the intervening months, strains have emerged over the Bank's reticence to cut interest rates to support a flatlining economy and Reeves's 'relentless' growth focus which has put all regulators, including the Bank and its financial watchdog, under the spotlight. Sources said these strains came to a head in recent weeks, when the governor blocked a prospective meeting orchestrated by Reeves with Treasury officials, the Prudential Regulatory Authority (PRA) and Revolut. Bailey's resistance is the first major pushback to Labour's regulatory overhaul and comes from one of the UK's most fiercely independent bodies. Sources said it was little surprise that the governor, a former chairman of the Financial Conduct Authority, is doggedly protecting the Bank from political interference in financial regulation — an area he has always had outsized interest in. Bailey is also the new head of the Financial Stability Board, the global watchdog for markets and lenders, and has warned of the dangers of the US administration weakening bank rules to promote political interests. Allowing Labour to interfere with bank rules at home would undermine his domestic and global reputation, one ally said. The row over Revolut follows months of arguing by Reeves that regulation is acting as a roadblock to economic growth. The chancellor used her first Mansion House speech to City grandees in November last year to warn authorities that the UK 'has been regulating for risk, but not regulating for growth' since the financial crisis. On Christmas Eve the chancellor and prime minister wrote to all of Britain's main regulators, including the energy and water watchdogs, asking them to submit ideas to the government that could bolster the economy. Ministers have since become even more interventionist and outspoken. One regulator that did not provide sufficient guarantees about fostering growth was the Competition and Markets Authority, a consumer and anti-monopoly watchdog, whose chairman Marcus Bokkerink was ousted by the government in January. • Andrew Bailey blocks Rachel Reeves's meeting with Revolut Reeves doubled down with another warning shot in her latest Mansion House speech this month where she gave her sternest warning yet to Britain's regulatory community. '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,' she said. Bailey soon distanced himself from the chancellor's words. He was asked last week by MPs on the Commons Treasury select committee if he agreed with the 'boot' comment and said: 'I don't use those terms, let me say that.' When asked whether the financial sector had a problem with over-regulation, Bailey said that while 'there are areas where we clearly should look at it', he also cautioned that 'we cannot compromise on basic financial stability, that would be my overall message'. Any attempts to rein in the independence of the Bank in its core areas of monetary and regulatory policy is highly sensitive. Labour celebrates that it was Gordon Brown who gave the Bank its monetary policy independence as chancellor in 1997 and Reeves has repeatedly shown public support for the central bank, where she once worked. But as the government has come under fire from businesses and the financial sector for its payroll taxes, and the UK economy has underperformed after a strong start to the year, there is rising pressure for Reeves to push all regulators to become subservient to its political aims. A potential flashpoint could come next year, when Sam Woods, current head of the PRA, steps down. The government may move to have an ally appointed to the role. Bailey and the central bank have also become lightning rods for Reform UK, which has criticised the Bank's interest payments to the commercial banking sector and sales of gilts — both which incur a cost for the Treasury.
CNBC
21 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.
