I am not meaning to start a rumour mill or perpetuate one already running however I want to see what the response is from people who know the fintech and banking sectors well.
I received a text from a friend saying he has received numerous texts from people telling him that Revolut may be going under and to get his money out of it.
Has anyone else heard this and is it even a possibility? He says this is probably unsubstantiated and I’m aware that in times of crisis people often start malicious rumours for some reason and they tend to spread like wildfire in times of panic.
Doubtful - given their principal backer’s extremely deep pockets. And on what basis are they going under?
Also all of your money is held in segregated accounts, so even if they did go bust you’re protected.
And didn’t they raise $500 million in February or so?
Yep, that sort of run rate would put the guys behind boo.com to shame!
Oh boo.com, the memories. Showing my age here clearly. They took the concept of “burn rate” way to literal, properly burning money!
Under which scheme are you protected
FSCS I suppose, but don’t use Revolut so cant guarantee.
Edit: never mind, they’re not. Wow.
Your money sits with a custodian though, in Revolt’s instance Barclays/Lloyd’s.
It’s an e-money license they operate under. So they have to hold your deposits under a nominee scheme at a bank. In Revolut’s case Lloyds and Barclays.
It’s not FSCS protection, but it’s as good as. Your claims for your deposits are paid above creditors.
It was the three Cs that did it: Concorde, Caviar and Champagne! The heady days!
That makes two of us!
Thanks for the quick responses. Getting more messages about it. I don’t understand why people just make stuff up.
I was being pedantic. I guess revolut are up front about their arrangement. Let’s hope they have enough money in there to cover everyone’s deposits and not just dipping in and out when they need to… I don’t know what controls there are around EMIs to ensure they have ALL the balances segregated…
Ah got you. I guess that’s the million dollar question?
I assume the FCA audits their accounts to make sure they’re doing as they should, but it’s not an area I know too much about.
No bank has enough money to cover all deposits, since we live in a fractional reserve banking system. Like it or not
Looks like they addressed it themselves…
Or the sceptic may say there is truth in the rumour and they’re trying to limit the damage.
Feeling mischievous today.
Fractional Reserve does not apply to revolut though.
In theory ebanks are better placed than traditional banks in one respect, which is that by having no physical branches they’re not exposed to any high street closures like traditional banks are.
The problem is at the first sign of trouble people will pull money out of neobanks into major banks. The government would be unlikely to save Revolut as it is not significant enough for the economy.
Pretty brave if you put your cash in any bank not covered by FSCS.