Revolut Bank, part of the U.K. FinTech unicorn Revolut, has been granted a full banking license by the European Central Bank (ECB), the Bank of Lithuania (LB) recently announced.
The ECB-licensed and LB-regulated specialized bank can now issue consumer credit among other services, while protecting Revolut’s European customers under the deposit guarantee scheme.
“After extending and supplementing the license, Revolut Bank UAB will complement its current main activities (accepting deposits and granting loans) with the payment services (card payments, direct debit, credit transfer, cash withdrawal, money remittance, payment initiation, account information services),” LB said in a statement.
Before the announcement, Revolut Bank had been operating in the European Economic Area (EEA) with a specialized European Union (EU) banking license it obtained through LB in December 2018. The FinTech then began rolling out banking services in May 2020, offering limited services like accepting deposits and offering credit services in Poland and Lithuania, its European base.
The Bank has since expanded operations to more than 15 European countries, launching banking services in 10 European countries earlier in March and more recently in France, Italy and Portugal.
In Portugal, however, the firm’s launch has been met with criticisms from local Portuguese banks accusing new FinTech operators like Revolut of being held to different standards than other banking institutions.
In response to those criticisms, Revolut’s CEO, Joe Heneghan, was reported by Algarve Daily News saying that as a specialized bank licensed by the ECB and regulated by the LB, Revolut complies “with the same European regulatory requirements as any other bank.”
The Portugal launch also prompted the Bank of Portugal (BdP) to clarify that the bank’s guarantee of deposits, which it launched in Portugal, is not associated with the Portuguese Deposit Guarantee Fund.
“Deposits taken in Portugal by Revolut Bank UAB are made with the parent company, in Lithuania, and are not guaranteed by the Portuguese Deposit Guarantee Fund but are subject to the deposit protection regime in force in Lithuania,” BdP reportedly stated, according to multiple local news outlets.
As of the third quarter (Q3) 2021, Revolut Bank held 395 million euros ($445.4 million) in deposits and a loans portfolio of 12 million euros ($13.5 million), according to LB.
But despite its EU banking license, Revolut is not yet a full-fledged bank on its home turf of the United Kingdom, operating with an electronic money institution license instead. To change that status, the challenger bank applied for a U.K. banking license earlier this year, which is expected to be granted in 2022.
Outside of Europe, the firm also applied for a banking license in the U.S. earlier this year, which Revolut co-founder and CEO, Nik Storonsky, said is an integral part of the journey to “build the world’s first global financial superapp.”
The Bank intends to offer its 300,000-plus U.S. customers essential financial products and services that are typically provided by traditional banks, like loans and deposits.
In addition to Revolut Bank, the company runs an ePayment platform also licensed in Lithuania known as Revolut Payments.
LB said Revolut Payments carried out payment transactions worth €100 billion in recent years and makes up over 50% of the electronic money and payment institutions market in Lithuania.
The U.K. FinTech has plans to consolidate the two branches, Revolut Bank and Revolut Payments, as part of expanding its banking services across Europe.
Revolut, which bills itself as a “financial super app,” launched in 2015 as a money-transfer service before expanding its services to include digital banking, stock trading, cryptocurrency and more for its 16 million-plus customers worldwide.
In July of this year, the company raised $800 million at a valuation of $33 billion, making it the U.K.’s most valuable private technology company worth more than 53-year-old NatWest, one of the country’s Big Four retail banks.
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