LHV Bank has been granted consumer credit permission by the Prudential Regulation Authority, clearing the way for an expansion of its UK retail banking proposition.

The approval follows a six-month regulatory application process and marks a significant milestone for the bank’s UK operations. Consumer credit permissions are subject to a high regulatory threshold, with firms required to demonstrate that they can manage credit risk prudently and consistently across economic cycles.

The decision allows LHV Bank to broaden its retail offering, including plans to introduce overdraft facilities for current account customers during 2026.

As part of its assessment, the regulator carried out detailed scrutiny of the bank’s end-to-end credit frameworks, financial crime controls, operational resilience, capital adequacy and board-level oversight.

The approval indicates regulatory confidence that LHV Bank has the governance, systems and controls in place to offer consumer credit responsibly within the UK banking system.

Erki Kilu, chief executive officer of LHV Bank, said: “Receiving consumer credit permission from the PRA is a strong endorsement of the robustness of our risk management and governance frameworks.

“These permissions are only granted where regulators have confidence that a bank can manage credit safely, at scale and over the long term.

“This outcome reflects substantial investment in our control environment, our people and our culture. It allows us to broaden our UK retail proposition while remaining firmly focused on prudent growth and responsible lending.”

Kris Brewster, director of retail banking at LHV Bank, added: “Overdrafts are a core feature of a full-service current account, and this permission allows us to develop a competitive product designed around customer needs and transparency.

“Our focus will be on delivering overdrafts that are simple, fair and aligned with responsible lending principles when we launch in 2026.”