US financial-technology company Upgrade applied to establish a Nevada-chartered industrial loan bank with federal deposit insurance. The company submitted applications to Nevada’s Financial Institutions Division and the Federal Deposit Insurance Corporation, according to two banking-industry reports. The proposed institution would be a wholly owned subsidiary called Upgrade Bank. Approval has not been granted.
Upgrade currently offers credit products through partner banks and said the proposed bank would complement those relationships. The company described separate governance and controls for the subsidiary. American Banker and PYMNTS reported the application after attempts to locate a public regulator filing or original company release did not produce a directly accessible document. The application therefore remains subject to regulatory review.
APPLICATION SEEKS A BANKING SUBSIDIARY
An industrial loan bank charter can permit a commercial owner to control an insured depository institution without becoming a bank holding company under the standard framework. That structure has attracted repeated debate about supervision and the separation of banking and commerce. Nevada is among the US states that charter such institutions.
Upgrade said it has delivered more than $53 billion in credit to over 8.5 million customers since 2016. Those company figures describe the scale of its existing platform, not the proposed bank’s future deposits or lending. No capital amount, opening date or initial balance-sheet target was disclosed in the reports.
REGULATORS CONTROL THE OUTCOME
Nevada regulators will assess the charter application, while the FDIC will consider deposit-insurance and related risk questions. The reviews can examine capital, management, business plans and safeguards between the parent and insured institution. Filing an application does not establish that either authority will approve it.
The next milestones are public docket materials, regulator decisions and any conditions attached to approval. Upgrade’s partner-bank arrangements remain the operating model unless and until the proposed bank opens. Further disclosures will be needed to evaluate how deposits, credit origination and servicing would be divided between the subsidiary and existing partners.