Market News

BY Samuel Norman

Rachel Reeves has clashed with the governor of the Bank of England after trying to support Revolut in its protracted regulatory process to secure a full banking licence.

The Chancellor is reported to have attempted to secure a meeting between financial watchdogs and Revolut in hopes of pushing forward its banking licence bid.

But the meeting was blocked by Bank of England governor Andrew Bailey in a major clash between the Treasury and financial regulators.

City AM reported earlier this month Revolut was set to miss a key banking licence deadline of July 25 for its 12-month “mobilisation” period – marking another regulatory headache for the fintech giant.

A spokesperson for Revolut told City AM: “We are progressing through the final stages of mobilisation and continue to work constructively with the PRA. Given Revolut’s global scale, this is the largest and most complex mobilisation ever undertaken in the UK.

“We are looking forward to launching a fully regulated UK bank for our millions of UK customers this year.”

Reeves’ clash with Bailey came as the Chancellor attempted to set up a three-way meeting with Treasury officials, Revolut and the central bank’s Prudential Regulation Authority.

The Chancellor had hoped the summit would help drive Revolut’s goal to become a fully fledged bank in the UK, according to the FT, but Bailey derailed the meeting over concerns regulation should be independent from political interventions.

The $65bn fintech has faced a series of struggles in its UK expansion, with chief Nik Storonsky previously blasting the country’s “extreme bureaucracy”.

Revolut received approval for its licence last year after a three-year wait, triggering a protracted process.

Reeves locks horns with Bailey

Tension between Reeves and Bailey is said to have grown in recent months as the Chancellor took the axe to regulation in her Mansion House and Leeds Reforms.

Reeves has called for watchdogs to “regulate for growth” and said regulation was a “boot on the neck” of businesses. Bailey was said to be “really pissed off” by the Chancellor’s comments, according to the FT.

The central bank governor told the Treasury Committee: “It’s not a term I’d use.” He told MPs:

“I think there are areas that we clearly should look at it, we’ve announced a whole range of things we’re doing, and that’s a good thing. But we can’t compromise on basic financial stability and that would be my overall message.”

Bailey has also vocally opposed significant changes to the ring-fencing regime imposed on Britain’s banking titans. Chiefs of HSBC, Santander, Natwest and Lloyds wrote to the Chancellor earlier this year lobbying for reform, which Reeves confirmed would be consulted upon during her Mansion House speech.

But Bailey has warned against this, telling MPs: “It would not be sensible to take it away at this point”.

The Treasury said: “The chancellor and the governor have a strong and productive relationship and the government fully supports the operational independence of the Bank of England.”