23.03.2022
Today, after a year of preparation, LHV UK applied for a banking licence in the UK.
According to Erki Kilu, CEO of LHV UK, preparation of the materials required for the banking licence application took exactly one year. At the same time, LHV has also actively communicated with supervisory authorities in the United Kingdom, and has taken the guidance and suggestions made by the supervisory authorities into account. ‘In addition to preparing the materials, we have also been engaged in setting up a team in the UK in the course of the year. Today, 25 people are already working in the LHV London office, with more joining every week. If you take the 55 people in the LHV Tallinn office who are directly involved in supporting LHV’s business in the United Kingdom into account, then this is already a fairly sizeable company,’ said Kilu.
According to the published financial plan, LHV UK will invest EUR 10 million in people, technology and risk control systems this year. ‘In addition to the expansion of the LHV London office, we are currently setting up a second office in Leeds, which will mainly employ IT specialists and developers. We are clearly moving in the direction of separating LHV’s business in the United Kingdom from that of the Estonian bank and making it fully independent. This means separation in terms of both people and technology. In terms of technology, we are making more use of modern off-the-shelf solutions and cloud technology. Tuum will be the main service provider for the bank’s main system in the United Kingdom. Other major service providers include Form3, Salesforce, Salv and others,’ Kilu added.
LHV Group decided to commence activities for establishing a bank in the United Kingdom in order to separate AS LHV Pank’s existing business activities in Estonia and the United Kingdom more clearly. Until now, LHV has operated in the UK through a branch of LHV Pank. Separating business activities allows for better compliance with regulatory and supervisory requirements. Clear separation also makes it possible to better highlight the results and value of the bank to be established for investors. Established in the United Kingdom, LHV UK is a wholly owned subsidiary of LHV Group.
Today, 200 clients who are intermediaries use the services of LHV Pank’s UK branch which, in turn, has more than 10 million end customers worldwide. Among others, clients include Wise, Monese, Coinbase, Trustly, Paysafe, Airwallex, TransferGo, Blockchain, and Currencycloud. These are leading-edge fintech companies, characterised by digital solutions, international reach and the important role of payments in their services.
Currently, LHV mainly offers clients who are financial intermediaries settlement services, such as accounts, payments, receipt of card payments, currency conversion, and other similar services. As a direct member of both the euro and sterling settlement systems, LHV is in a unique position to offer clients real-time payments in both of the most important currencies in Europe. Services are mainly offered to clients through LHV Connect, a fast and functional banking interface.
A prerequisite for LHV UK operating as a bank is approval by supervisory authorities of the United Kingdom. It can take up to 6 months to apply for a banking licence if the application is complete, or up to 12 months if the application is incomplete. After obtaining its banking licence, LHV plans to transfer its business from the United Kingdom branch of LHV Bank to LHV UK.
LHV Group is the largest domestic financial group and capital provider in Estonia. LHV Group’s key subsidiaries are LHV Pank, LHV Varahaldus, and LHV Kindlustus. LHV employs over 670 people. As of January, LHV’s banking services are being used by 327,000 clients, the pension funds managed by LHV have 135,000 active clients, and LHV Kindlustus protects a total of 145,000 clients. LHV’s UK branch offers banking infrastructure to 200 international financial services companies, via which LHV’s payment services reach clients around the world.
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