Brokerage firm pursuing industrial charter would create digital bank

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Interactive Brokers Group, which has applied for an industrial bank charter in Utah, plans to use it to open a digital bank.

The Federal Deposit Insurance Corp. had said the Greenwich, Conn., brokerage firm filed an application last week for deposit insurance for the industrial bank. However, a copy of the application was not available until late Wednesday.

The application spells out IBG's proposal to establish Interactive Bank, which would have have an office in Salt Lake City and no branches. The bank would offer transaction and nontransaction deposits, along with checks, bill payment and debit cards. While IBG plans to cross-market the bank’s products to its brokerage clients, it also expects to bring in “independent bank customers seeking to broaden their financial capabilities,” the application said.

The bank would also offer variable- and fixed-rate loans with terms of up to 36 months. Its assets would include collateralized loans and investment-grade securities.

IBG expects to compete primarily against retail securities brokers that have bank affiliates, as well as against online deposit-gathering platforms.

IBG said it will infuse enough cash to maintain a 10% leverage ratio at the bank. Interactive Bank is expected to become profitable after its first full year of operation.

Sheldon Woods is expected to serve as the proposed bank’s president and CEO. He was president and CEO of Pitney Bowes Bank from September 1997 to May 2019, according to his LinkedIn profile.

The application lists Steven Scott as the proposed chief financial officer and Nathan Johnson as chief operating officer.

Thomas Peterffy, IBG’s chairman and CEO, would serve as the bank’s chairman. Independent directors would include John Koch, Stephen Paneyko and Mia Love.

As part of its effort, IBG has filed a charter application with the Utah Department of Financial Institutions, according to a public notice in the Deseret News.

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