On March 17, the OCC announced it had conditionally approved an application of a fintech to change the business model of a nationally chartered bank upon acquisition of the bank by the fintech, specifically allowing the fintech company to become a bank holding company by indirectly acquiring the bank. The approval is conditioned in part on the applicant receiving approval from the Fed for its related bank holding company application. The proposed transaction will occur in two steps: first, the fintech’s designated subsidiary merger vehicle will merge with and into the bank’s holding company; and second, the fintech will merge with and into the holding company, with the bank holding company surviving both mergers.
The final approval is subject to several requirements. The bank must (1) notify the San Francisco Supervisory Office at least 60 days before materially deviating from or changing its business plan or operations and obtain the OCC’s written determination of no objection before engaging in any material changes in its business plan or operations, (2) maintain loan concentrations consistent with the business plan, (3) maintain minimum capital levels commensurate with the risk of the business plan, (4) receive a $6 million capital injection from its parent, and (5) file an Interagency Biographical and Financial Report and receive a letter of no objection from the OCC prior to the addition of any new executive officer or director for a period of two years.
Additionally, the bank must submit a draft CRA Strategic Plan and ensure compliance with all application representations. If the transaction steps are not completed within six months, the approval will automatically terminate unless the OCC grants an extension.
