OCC Conditionally Approves FinTech Company Applications To Charter National Bank – Finance and Banking

On January 18, 2022, the OCC conditionally approved applications by Social Finance, Inc. (“SoFi”) to establish a full-service national bank.

In the OCC letter, SoFi Interim Bank, National Association (“SoFi Bank, NA”) received conditional approval and also received approval to acquire Golden Pacific Bank, National Association as part of the transaction. SoFi Bank, NA will have total assets of $5.3 billion. The OCC is requiring, among other conditions, an initial contributed capital of $750 million upon completion of the transaction. The bank will continue to offer local commercial offers and deposit products that Golden Pacific previously offered.

The letter says the bank will also provide a fully digital consumer lending platform nationwide. This is contingent on (i) meeting required capital contributions, (ii) meeting an operating agreement, and (iii) confirming that the bank will not engage in any “crypto-asset business or service” .

Additionally, SoFi Technologies, the parent company of SoFi Bank, NA, has a pending application with the Federal Reserve Board to become a bank holding company and, therefore, would be subject to consolidated oversight.

Acting Comptroller of the Currency Michael J. Hsu stressed the importance of having a level playing field. He said bringing a large FinTech company “into the federal bank’s regulatory perimeter” will subject the company to “banking regulations, including the Community Reinvestment Act” and “full oversight.”

Comment Daniel Meade

As noted by Acting Comptroller Hsu, this approval represents one of the first approvals to bring a major FinTech company into the federal regulatory perimeter, and the first full-purpose national bank charter (i.e. taking of insured deposits) for a FinTech. The OCC’s conditional order also included a condition that the bank will not engage in any crypto-asset business or service during the three years that the operating agreement is in effect, unless it has received a prior written decision of no objection from the OCC under the procedures set forth in the operating agreement. This is essentially a requirement that the OCC has imposed on all domestic banks since it issued Interpretative Letter 1179 in November 2021. Thus, crypto-asset business already undertaken by SoFi will have to remain within mother Society.

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