Revolut expected to sign overdue accounts next week

Revolut expects to sign off on its financial accounts next week after months of delays in finalizing the figures as auditors put pressure on the fintech group to improve its internal controls.

The UK company’s audit committee will meet on Thursday to approve its 2021 financial statements, which are then expected to be signed off by auditor BDO on Friday, people familiar with the matter told the Financial Times.

The company, led by Nik Storonsky, has had significant growing pains in its quest to take over traditional banks. Insiders have revealed a highly taxing culture, and the company, last valued at $33 billion in July 2021, has been hit by high-profile departures of senior compliance staff.

Regulators have investigated the culture and called for a separate review of the measures in place to prevent and detect financial crime at the fintech, which has been applying for a UK banking license since early 2021.

The submission of the accounts will be able to remove another of the obstacles for the company’s attempt to obtain a licence. The UK regulators responsible for granting the license – the Financial Conduct Authority and the Prudential Regulation Authority – declined to comment.

The accounts for the year ending December 2021 were required to be sent to Companies House in September 2022. Fintech was then given an extension until the end of December — a deadline it has also failed to meet.

In a statement on January 6, Revolut said its accounts were “closed”.

On Friday, it reiterated that its accounts were “completed” and that it expected to confirm that the business was profitable. “We are very proud of this and intend to submit the accounts soon,” it said. BDO declined to comment.

While final sign-off could be delayed by any late concerns, people with knowledge of the matter said they did not expect further delays.

BDO has pushed Revolut to improve its internal controls after the UK accounting regulator, the Financial Reporting Council, found there was an “unacceptably high” risk of “material misstatement” in its 2020 accounts.

The FRC findings, revealed by the FT in September, included that BDO’s audit had a “deficient” approach to revenue recognition. The FRC’s criticism of BDO had led the auditor to take a tougher approach to this year’s accounts, people with knowledge of the matter said.

A person close to Revolut said regulators could grant the fintech “authorisation with restriction” – a precursor to receiving a full banking license – within months and as soon as March after submitting accounts.

Storonsky told the FT in November 2021 that he hoped to secure a UK banking license in early 2022. Last November he said “we are very close to the end of the process, or as close as we’ve ever been”.

Revolut has evolved from a low-fee money transfer service to offering bank accounts across Europe through its Lithuanian banking license. The previous round of funding made it the second most valuable private fintech in Europe and meant it didn’t have to return to the market as tech valuations crumbled.

Analysts say a UK banking license would help boost profitability, particularly as higher rates make deposits more valuable, and would also help convince regulators in other markets to offer licences.

Revolut can be fined by Companies House for not delivering the accounts on time. The penalty for filing up to three months late is up to £375 per company. Company directors can also face prosecution if the register chooses to pursue them.

The European bank was fined €70,000 in November for late submission of its accounts.