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Mobile-focused digital banking provider Varo Money has applied for a banking charter with the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC), as chartering options continue to be debated for US fintech companies. Varo Money is the second fintech company to apply for bank chartering following SoFi who currently has an application pending with the FDIC.
Varo Money has applied for two approvals, one a national banking charter with the OCC and the second an application for deposit insurance with the FDIC. According to the Wall Street Journal, approvals would allow the company to take deposits, pay interest, make loans in any state and issue cards, all independently.
Details of the firm's applications have not been released publicly and it's likely to be a slow process for approval with the OCC who is currently being sued over offering a national banking charter for fintechs. The FDIC process also includes an open comment period which has been challenging for SoFi. Varo Money does have a significant investment from Warburg Pincus which also includes support from former US Treasury Secretary Timothy Geithner, who is the firm's president.
Banks of all stripes have recently shown that a slowdown to the recovery might be coming; total loans and leases by banks and other insured institutions rose by just 3.7% from a year earlier at the end of June; this compared to 6.7% growth in total loans and leases last year; credit-card charge-offs, grew by 24.5% in the second quarter, marking the seventh straight quarterly increase; with the recovery being in its ninth year it isn't too surprising to see, FDIC Chairman Martin Gruenberg said in a statement; the 5,800 banks that the FDIC monitors are doing quite well though, their combined net profits in the second quarter were up 10.7% from a year earlier. Source
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