Nubank receives conditional OCC approval for US charter

• Key insight: Brazil's Nubank received conditional approval from the Office of the Comptroller of the Currency to enter the U.S. digital banking market.
• What's at stake: The approval signals the willingness on the part of the OCC for competition within the digital banking industry.
• Expert quote: The approval "sends a strong signal to other charter applicants that the OCC is serious about adhering to its 120-day application review timeline and streamlining the process." –Michele Alt, partner and co-founder of Klaros Group

The Brazilian neobank Nubank has received conditional approval from the Office of the Comptroller of the Currency to enter the U.S. digital banking market with a de novo charter.

The conditional approval is the latest step in the São Paulo-based Nubank's international expansion, with the U.S. becoming the fourth country in which it will operate. The U.S. subsidiary will be called Nubank NA.

"This approval isn't just an expansion of our operation; it's an opportunity to prove our thesis that a digital-first, customer-centric model is the future of financial services globally," said Nubank co-founder David Velez. "While we remain fully focused on our core markets in Brazil, Mexico and Colombia, this step allows us to build the next generation of banking in the United States."

The national bank charter will, pending full approval, allow Nubank to launch deposit accounts, credit cards, lending and digital asset custody for U.S. consumers.

Nubank manages $38.8 billion in deposits and $30.4 billion in its credit portfolio, according to its most recent earnings report. The neobank also reported 127 million customers globally, of which 13 million are from Mexico and 4 million are from Colombia.

The U.S. subsidiary will be led by Nubank co-founder Cristina Junqueira. She told American Banker in an interview late last year that leading two international expansions, both of which opened in 2020, has helped her prepare to bring Nubank's offerings to U.S. consumers.

"Receiving federal approval for a national bank charter is a significant step in our journey to becoming a solid, compliant and competitive regulated institution in the U.S," she said.

Having received the conditional approval, Nubank now begins an organizational phase, which involves satisfying specific conditions stipulated by the OCC for final approval and receiving approvals from the Federal Reserve and FDIC.

The neobank will also focus on capitalizing the institution within 12 months and opening the bank within 18 months as required by regulators, according to a company statement.

Nu submitted its application to the OCC on Sept. 30. The approval process took 121 days in total, in line with the 120-day application review timeline outlined in the OCC's licensing guidelines.

Michele Alt, partner and co-founder of the legal firm Klaros Group, told American Banker that securing the OCC's conditional approval was a "critical step" for Nubank in entering the U.S. market. Klaros Group is one of Nu Holding's legal advisors in the U.S. charter application process.

"The OCC's conditional approval of Nu's charter application not only demonstrates Comptroller Jonathan Gould's commitment to new bank formation and healthy competition in the banking market, but sends a strong signal to other charter applicants that the OCC is serious about adhering to its 120-day application review timeline and streamlining the process," she said. "The days of slow-walking charter applications are clearly over, and that's good news for aspiring financial innovators."