OCC Approves a Fintech Banking Business
"This conditional approval demonstrates the OCC's commitment to a regulatory framework that supports innovations in banking that expand access to financial services for consumers and communities across the country."
Rodney E. Hood, Acting Comptroller of the Currency
"This conditional approval demonstrates the OCC's commitment to a regulatory framework that supports innovations in banking that expand access to financial services for consumers and communities across the country."
Rodney E. Hood, Acting Comptroller of the Currency
The OCC granted conditional approval for a national bank "to effect a substantial asset change resulting from a material increase in size." The application stems from a transaction in which a Fintech company seeks to become a bank holding company by indirectly acquiring the bank.
According to the OCC, the new entity will be renamed and will "expand the national bank’s lending and deposit-taking activites [sic] nationwide causing a material increase in assets, as well as offer a loan origination platform to partner banks."
The OCC stated that the approval is conditional upon the following:
- The bank must "notify the San Francisco Supervisory Office at least 60 days" in advance of any significant changes to its business plan and also obtain OCC’s written approval before making such changes.
- The bank must "maintain loan concentrations consistent" with the limits set in its business plan.
- The bank must maintain "minimum capital levels" in line with its business plan with a "tier 1 leverage ratio of no less than 11.0[%]" during the first three years of operation.
- The bank must receive a "$6 million capital injection from its parent, net of expenses," immediately after the transaction is completed.
- Any new executive officer or director must submit an "Interagency Biographical and Financial Report" and receive an OCC letter of no objection before assuming their position.
- The bank must "submit a draft Community Reinvestment Act Strategic Plan within [90] days of the transaction closing" and a finalized plan "within 12 months."
- The bank must adhere to "all representations and commitments" made in the application, including those in a letter from its CEO to the OCC dated February 5, 2025.
The OCC also included a pre-consummation requirement that the transaction cannot be completed until "all regulatory approvals" are obtained.