Bank of England Governor Moves to Block Political Interference in Revolut Banking Bid

The relationship between the UK government and the Bank of England has taken a fresh turn as Governor Andrew Bailey stepped in to block a planned meeting between Chancellor Rachel Reeves, fintech giant Revolut, and the Prudential Regulation Authority. The meeting, intended to discuss Revolut’s ambitions to launch a banking business in Britain, was reportedly halted over concerns of political intervention in the independent regulatory process.

This development comes at a time when Reeves has been vocal about her agenda to cut regulatory red tape across UK industries, positioning it as central to her plan for reviving the nation’s economic fortunes. Reeves has criticised watchdogs for stifling growth through excessive caution and, in a recent address at Mansion House, argued that regulation is throttling enterprise and innovation vital to prosperity. The Bank’s governor has made clear that such rhetoric gives him pause, focusing instead on maintaining robust financial stability. “We cannot compromise on basic financial stability, that would be my overall message,” Bailey told MPs when questioned about the Chancellor’s remarks.

Revolut has long been considered a shining example of the UK’s fintech sector, having been founded just a decade ago by Nik Storonsky and Vlad Yatsenko and swiftly expanding to offer a spectrum of services from international payments to cryptocurrency trading. The group achieved an impressive valuation of $45 billion, employs over 10,000 staff, and posted pre-tax profits of £1.1 billion last year. Despite these achievements, its path to obtaining a full UK banking licence has been fraught with delays and regulatory hurdles.

Issues with Revolut’s 2021 accounts prompted concerns, as its external auditor BDO highlighted that it could not satisfactorily verify approximately £477 million of the firm’s £636 million annual revenue due to limitations in testing Revolut’s IT systems. These concerns contributed to a licensing process that took more than three years, far longer than the twelve months usually required. Revolut only resolved these accounting issues and secured its licence a year ago, but remains under strict restrictions, limited to building and testing banking systems rather than fully launching lending operations.

Revolut’s journey has also been marked by scrutiny over its effectiveness in tackling fraud, customer complaints regarding treatment after scams, and a historically high turnover among senior leadership. A 2019 advertising controversy and a complex shareholding structure, only simplified last year, added complications on the road to regulatory approval. Nevertheless, the company’s growth trajectory has not faltered, reporting a customer base of 52.5 million and ongoing talks to achieve a valuation of $65 billion.

While the Treasury maintains the Chancellor and Governor share a strong and productive working relationship, the recent intervention underscores tensions over how best to balance dynamism in financial services with the imperatives of regulatory independence and stability. The industry now waits to see how Revolut’s UK banking ambitions will unfold in a landscape increasingly defined by the intersection of politics and independent oversight.