BOE chief says no rift with government as Revolut licence delay draws scrutiny

In an exclusive interview with CNBC, Bank of England Governor Andrew Bailey clarified that there is no discord between the central bank and the U.K. government regarding the postponed bank license for fintech firm Revolut. This statement comes in the wake of reports from the Financial Times indicating that a crucial meeting involving British Finance Minister Rachel Reeves, Revolut, and the Prudential Regulation Authority (PRA) was abruptly cancelled following Bailey's intervention. The approval of Revolut as a fully licensed bank has gained significant attention from the U.K. government, especially as prominent figures in the tech sector have raised concerns about recent tax reforms affecting affluent individuals. However, Bailey reassured that relations between him and Reeves remain strong, stating, "There's been no falling out between [Reeves] and I on this, or indeed on anything. Actually, we have very good relations, and I think both the Bank and the Treasury have made that clear." While Bailey refrained from delving into specifics regarding Revolut, he noted that the PRA is currently collaborating with the digital banking startup during its ongoing mobilization phase. Revolut was granted a banking license with certain restrictions in July 2024, concluding a lengthy application journey that began in 2021. This milestone marked the company's transition into the mobilization phase, where it is permitted to hold only £50,000 in total customer deposits, a stark contrast to the significant sums deposited by clients of major banks like Barclays, HSBC, and Santander. During this phase, U.K. customers of Revolut are still supported by the company’s e-money division rather than its banking entity, which means they are not directly covered by the Financial Services Compensation Scheme that safeguards deposits up to £85,000 in case of a firm's failure. The delays surrounding Revolut's licensing have sparked criticism towards the government, with the U.K. tech sector demanding more proactive measures to ensure the nation's competitiveness against the U.S. and other key financial hubs. Bailey emphasized that ensuring financial stability does not impede economic growth. He also expressed openness to regulatory adjustments that could bolster the fintech landscape, stating, "We are very open to making changes where they're appropriate."