LHV Bank Joins PRA and FCA Scale-up Unit to Accelerate UK Growth Strategy

LHV Bank has joined the second cohort of the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) Scale-up Unit. This move provides the bank with a dedicated regulatory contact to navigate the complexities of scaling in the UK, a critical step for fintechs transitioning from high-growth startups to established, systemic financial institutions.

What was announced

The Scale-up Unit was established in October 2025 as a core component of the UK Government’s Financial Services Growth and Competitiveness Strategy. It is designed specifically for high-growth banks and building societies, offering them direct regulatory engagement to ensure they scale responsibly. For LHV Bank, participation follows its 2023 receipt of a full UK banking authorisation and a period of significant commercial expansion.

The bank operates across three primary verticals: an app-based retail current account for savers, flexible lending for UK businesses, and a Banking Services division. The latter provides essential payments infrastructure and technology to other fintechs and financial institutions across the UK and Europe. This infrastructure-led approach allows LHV Bank to power other businesses, helping them innovate and reach more customers through its proprietary technology.

Financial performance data from 2025 highlights the scale of the operation LHV is now managing. The bank reported £1.1 billion in customer deposits and £0.7 billion in lending, resulting in a profit after tax of £5 million. By joining the Scale-up Unit, LHV Bank gains a dedicated regulatory contact who will assist with product development and the practicalities of regulatory processes. This engagement is intended to help the bank manage the specific challenges of scaling a modern, technology-led banking business while maintaining governance and resilience standards. Participation in the unit does not constitute an official endorsement by the FCA or PRA.

"We’re ambitious about what LHV Bank can achieve in the UK. Joining the Scale-up Unit is an important step in our growth story and supports our commitment to scaling responsibly, with the right governance, resilience and customer focus."

Kris Brewster, Interim Chief Executive Officer of LHV Bank

The companies involved

LHV Bank is a UK-based financial institution and a subsidiary of the Estonian financial group LHV. Since securing its UK banking license in 2023, the bank has positioned itself as a bridge between traditional banking stability and fintech agility. Its Banking Services arm is particularly influential in the market, acting as an infrastructure provider that powers the accounts and payment systems of numerous other financial services firms.

The bank has focused its UK strategy on filling gaps in the SME lending market and providing competitive retail savings products. By operating its own proprietary technology stack, LHV Bank maintains control over its infrastructure, which it then offers to the wider fintech ecosystem. This dual role as both a consumer-facing bank and a B2B infrastructure provider gives it a unique vantage point in the UK financial landscape. The parent company, LHV, has a long history of supporting innovation in the Baltics, and the UK entity represents its most significant international expansion to date, aiming to replicate its success in a larger, more competitive regulatory environment.

What FF News has reported before

FF News has closely followed LHV Bank’s expansion and technological evolution. In October 2026, the bank announced a significant leadership change, with LHV Bank Appoints Former Starling Executive Damian Thompson as CEO to Drive SME Growth. This followed the bank's efforts to enhance its operational efficiency, including a partnership where LHV Bank Launches Agentic AI for Customer Support in Partnership with Gradient Labs.

The bank has also been active in physical expansion and market research. In September 2026, we reported on the bank's infrastructure growth as LHV Bank Expands Leeds Presence with New 'Northern Square Mile' Headquarters. Additionally, the bank has highlighted consumer issues in the sector, as seen when LHV Bank Research Exposes UK Savings Gap: 53% of Savers Unsure if Interest Rates are Competitive revealed significant uncertainty among savers regarding the value they receive from their current providers.

What this means

The inclusion of LHV Bank in the Scale-up Unit signals a shift in how UK regulators handle the "middle-child" phase of banking growth. For too long, firms have faced a regulatory cliff when moving from small-scale pilots to systemic importance. By providing a dedicated contact, the PRA and FCA are acknowledging that the risks and operational needs of a digital-first bank with over £1 billion in deposits are fundamentally different from those of a legacy incumbent. This move puts pressure on other mid-tier banks to seek similar bespoke engagement or risk falling behind in the race to launch compliant, innovative products. It remains to be seen if this level of regulatory hand-holding can truly prevent the growing pains that have historically plagued rapidly scaling fintechs.