FinTech: Eyeing A UK Banking License, Revolut And SoftBank Bury The Hatchet On Share Structure
This information was revealed by the Financial Times.
Revolut has reached an agreement with its largest investor, SoftBank (TYO: 9984), to simplify its ownership structure, a move that helps clear a significant obstacle in its quest to obtain a crucial banking license in the UK. This development follows months of negotiations between the two parties, internally referred to as “Project Swan.” SoftBank had initially sought substantial compensation for relinquishing its priority class of shares. (Financial Times)
The Bank of England, responsible for approving banking license applications, had stipulated that Revolut must collapse its six classes of shares, which had accumulated over multiple funding rounds since its inception in 2015, as a prerequisite for obtaining a UK banking license. This regulatory requirement also necessitates approval from the Financial Conduct Authority.
The recent agreement in principle does not involve the issuance of additional “top-up” shares for SoftBank, and it has no financial impact on Revolut. Notably, SoftBank had initially requested twice the amount of common stock in exchange for relinquishing some of its preferential rights secured during a fundraising round in 2021, which had elevated Revolut to the status of the UK’s most valuable private tech company.
Despite this development, SoftBank, the Bank of England, and the Financial Conduct Authority have refrained from making public comments. Revolut has yet to provide an official response to requests for comment.
Furthermore, other investors, including Tiger Global Management, venture capital firm TCV, Balderton Capital, and Ribbit Capital, have either agreed to transfer their shares into a single class or are in the final stages of doing so.
While resolving the complex share structure issue is a significant step toward securing a license, Revolut still faces other challenges. Concerns about the timeliness and accuracy of its financial accounts have been raised by regulators, including the BoE’s Prudential Regulation Authority and the FCA. Revolut has recently reassured them that its 2022 accounts will be finalized and submitted without qualifications.
Additionally, Revolut is in discussions with the FCA regarding system failures that allegedly allowed the release of £1.7 million from accounts flagged as suspicious by the UK’s National Crime Agency.
Image of Revolut Co-founder Nik Storonsky: Revolut
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