Revolut blames Brexit for moving a million business customers from London to Lithuania
Revolut blamed Brexit for forcing it to move more than a million business customers from London to Lithuania in order to market its products to European customers.
The fintech company will transfer all European Economic Area (EEA) customers of Revolut Trading Ltd, its UK-based subsidiary, to its Lithuanian business by the end of this year, according to accounts filed at Companies House. .
The company did not reveal how many customers will be affected, but it is understood that it will transfer more than a million accounts to its Lithuanian branch.
The fintech trading business, which allows clients to invest in stocks and cryptocurrencies, has become a major source of revenue for the company in recent years.
In the accounts, Revolut said: “Due to legislation introduced following the UK’s departure from the European Union, the company cannot currently offer to market its products to its EU-based customers.
“As a result, the company plans to migrate these customers to Revolut’s European licensed business entity towards the end of 2022.”
The accounts also reveal that the city watchdog has yet to grant Revolut a so-called Mifid license, highlighting the regulatory hurdles it continues to face in the UK. The company obtained this license for its Lithuanian activity last year.
It comes as the $33bn (£29.5bn) company is still awaiting a decision on its UK banking license application, which it applied for in January 2021 and is seen as a milestone key to its development.
Nikolay Storonsky, the company’s co-founder and chief executive, previously said he hoped to get the license in early 2022.
The former banker has hit out at the Financial Conduct Authority (FCA) over what he sees as the slowness of its application handling procedures, saying they were “slower than expected”.
Revolut has endured a turbulent few months, including a series of high-profile resignations and facing questions over its audit and a cyberattack that affected around 50,000 customers.
Accounts show Revolut Trading Ltd generated nearly £13m in revenue in 2021, an increase of almost 70% on the previous year. Pre-tax profits were £8.9m for the period.
Last month, in a boost for the business, Revolut received permanent approval from the FCA to run its UK cryptocurrency business, after being placed on a temporary register.
Revolut can no longer market commercial products to EU customers from the UK, as UK-based businesses were stripped of their passporting rights following the UK’s exit from the EU, which gave companies full access to European markets.
The Mifid 2 regulation was introduced by the EU in 2018 with the aim of reducing conflicts of interest in the financial services sector.
A Revolut spokesperson said: “We plan to migrate all EEA-based users of our trading product from Revolut Trading Ltd to Revolut Securities UAB.
“This migration will allow us to further develop our commercial product in the EEA. Revolut Securities UAB is our investment company and Mifid is licensed by the Bank of Lithuania.”
The FCA declined to comment. m