Estonia-based LHV Bank has secured consumer credit authorization from the UK's Prudential Regulation Authority (PRA) after completing a rigorous six-month evaluation process, marking a pivotal regulatory achievement for the digital bank's UK operations.
The approval represents a significant vote of confidence in LHV Bank's risk management infrastructure and governance framework. Consumer credit permissions are granted only when regulators are satisfied that financial institutions can manage credit risk responsibly throughout economic cycles.
This authorization enables LHV Bank to broaden its retail banking portfolio, with plans to introduce overdraft facilities for current account holders later in 2026. The bank currently offers a current account with 3.75% AER on balances up to £1 million and an easy access savings account paying 4% AER on deposits up to £100,000.
During the assessment process, the PRA conducted comprehensive scrutiny of LHV Bank's end-to-end credit frameworks, anti-financial crime controls, operational resilience, capital adequacy, and board-level oversight. The regulator's decision confirms that LHV Bank possesses the necessary systems, controls, and governance structures to offer consumer credit responsibly within the UK banking system.
"Receiving consumer credit permission from the PRA is a strong endorsement of the robustness of our risk management and governance frameworks," said Erki Kilu, CEO of LHV Bank. "These permissions are only granted where regulators have confidence that a bank can manage credit safely, at scale and over the long term."
Kilu emphasized that the approval reflects substantial investment in the bank's control environment, people, and culture, allowing LHV to expand its UK retail proposition while maintaining focus on prudent growth and responsible lending practices.
Kris Brewster, Director of Retail Banking at LHV Bank, highlighted that overdrafts are a fundamental feature of full-service current accounts. "This permission allows us to develop a competitive product designed around customer needs and transparency," Brewster stated. "Our focus will be on delivering overdrafts that are simple, fair and aligned with responsible lending principles when we launch in 2026."
LHV Bank entered the UK market in 2023 and has since grown customer deposits to over £1 billion. The bank is part of LHV Group, an Estonian financial services provider that manages assets exceeding £10 billion and employs more than 1,000 staff across the EU and UK.