LHV Bank secures PRA approval for consumer credit in UK

By Vriti Gothi

LHV Bank has received consumer credit permission from the UK’s Prudential Regulation Authority (PRA), clearing the way for the bank to expand its retail lending activities in the country.

The approval follows a six-month application process and will allow LHV Bank to introduce additional products for its UK customers, including planned overdraft facilities for current account holders in 2026.

Consumer credit permissions are subject to detailed regulatory assessment and require firms to demonstrate robust capabilities in managing credit risk across economic cycles. As part of the process, LHV Bank underwent scrutiny of its end-to-end credit frameworks, financial crime controls, operational resilience, capital adequacy and board-level governance.

The development marks a regulatory milestone for the bank’s UK operations, positioning it to broaden its retail proposition in a market where supervisors have maintained heightened expectations around responsible lending, risk management and consumer protection.

Erki Kilu, chief executive of LHV Bank, said the decision reflected regulatory confidence in the bank’s internal controls. “Receiving consumer credit permission from the PRA is a strong endorsement of the robustness of our risk management and governance frameworks,” he said. “These permissions are only granted where regulators have confidence that a bank can manage credit safely, at scale and over the long term.”

Kris Brewster, director of retail banking at LHV Bank, said the permission would support the development of overdraft products as part of a broader current account offering. “With overdrafts a core feature of a full-service current account, the permission enables us to develop a competitive product designed around customer needs and transparency,” he said.

The move comes as UK regulators continue to emphasise financial resilience and consumer outcomes in retail banking, particularly in unsecured lending segments such as overdrafts. For challenger and specialist banks, obtaining consumer credit permission is a prerequisite for competing more fully with established incumbents in the current account market.