Revolut Contemplates Auditor Swap
The fintech giant Revolut is contemplating changing its auditors at a pivotal moment in its endevour to secure a banking license in the UK. This is due to a recent upheaval involving its audit report by BDO, The Standard reported.
The audit raised concerns over the completeness and occurrence of a significant portion of the company’s revenues. This has triggered a response from Revolut’s executives, including legal action to alter media coverage.
Revolut’s Audit Challenges and Market Expansion
While the company officially maintains confidence in its financial statements, there is uncertainty around the planned changes. In March, BDO’s audit report raised issues regarding the completeness and occurrence of a sum of £477 million in the firm’s financial report, citing potential misstatements and IT control problems.
Despite considering a shift from BDO, Revolut could retain the auditors at least until the end of its 2023 financial year. However, the plans could potentially impact Revolut’s quest for a British banking license. Revolut has waited for a long time to secure the approval due to audit-related challenges.
Meanwhile, Revolut recently unveiled plans to grant retail investors access to bond trading in Europe. This move aims to democratize corporate and government bond market by lowering the entry barrier to €100. With a valuation of approximately €122 trillion, this market has traditionally been challenging to the retail investors.
Revolut’s foray into the bond market is not limited to Europe. It will encompasses the US market as well. The fintech firm’s retail investors will gain access to trade US government bonds and corporate bonds from major entities like Wells Fargo and Apple, Finance Magnates reported.
Pursuit of the UK Banking License
Currently, Revolut operates within the European Union under a Lithuanian banking license. However, the UK remains a pivotal market for the company in terms of revenue. Despite Revolut’s application for a UK banking license in 2021, hurdles persisted, notably the complexity within its ownership structure. The Bank of England has highlighted its multiple share classes as a challenge to granting the license.
However, months-long negotiations between Revolut and SoftBank, termed as “Project Swan,” led to an agreement beneficial for streamlining this concern. SoftBank relinquished its preferential rights without the issuance of new shares or financial repercussions on Revolut.
Additionally, the firm consolidated shares by other major investors like Tiger Global Management. This move aligned with Revolut’s ambitions to enhance its offerings, including potential expansion into lending products and the protection of customer funds under the UK’s deposit insurance scheme.