Revolut US Bank Buyout Plan & OCC Charter Pursuit
- Revolut, the U.K.-based financial technology company, has altered its U.S.
- bank to accelerate its entry into the market, but has now determined that pursuing a standalone national banking license offers a clearer path to scale. The Financial times...
- A national charter, granted by the Office of the Comptroller of the Currency (OCC), allows banks to operate across state lines, simplifying regulatory compliance and potentially reducing costs...
Revolut Abandons U.S. Bank Acquisition, Pursues National Banking license
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Revolut, the U.K.-based financial technology company, has altered its U.S. expansion strategy, opting to apply for a national banking license instead of acquiring an existing American bank. This shift aims to provide a more direct route to expanding lending and other banking services within the United States, the world’s largest retail finance market.
The Decision to Seek a National Charter
Revolut initially explored acquiring a U.S. bank to accelerate its entry into the market, but has now determined that pursuing a standalone national banking license offers a clearer path to scale. The Financial times reported that Revolut has engaged in discussions with U.S. officials regarding the application process.
A national charter, granted by the Office of the Comptroller of the Currency (OCC), allows banks to operate across state lines, simplifying regulatory compliance and potentially reducing costs compared to obtaining individual state banking licenses.
The Office of the Comptroller of the Currency (OCC) and National Bank Charters
The OCC is a bureau of the U.S. Department of the Treasury responsible for chartering, regulating, and supervising national banks and federal savings associations. According to the OCC’s official website, its mission is to ensure the safety and soundness of the federal banking system and to promote financial innovation.
The process of obtaining a national bank charter is rigorous, requiring applicants to demonstrate financial stability, a sound business plan, and a commitment to compliance with banking regulations. As of December 2023, the OCC oversaw 1,238 national banks and federal savings associations, representing approximately 78% of the assets in the U.S. banking system. OCC data shows a total of $16.3 trillion in assets held by these institutions.
Implications for Revolut’s U.S. Expansion
Securing a national banking license would allow Revolut to offer a wider range of financial products and services in the U.S., including lending, mortgages, and more complex financial instruments. Currently, Revolut operates in the U.S.through a partnership with Cross River Bank, a New Jersey-chartered bank. This arrangement limits Revolut’s ability to fully control its U.S. operations and product offerings.
The application process with the OCC can take a critically important amount of time – frequently enough exceeding a year – and requires significant investment in compliance infrastructure. However, a successful outcome would position Revolut for substantial growth in the U.S.market, potentially challenging established financial institutions.