American Banker, September 23, 2023, Rakuten Backpedals On Plan For Credit Union Charter
Rakuten has withdrawn its latest bid for a federally issued charter after submitting an application to the National Credit Union Administration earlier this year.
This was Rakuten’s fourth attempt to become a licensed financial institution in the U.S. Executives of the tech giant explained in a July 2019 press release that pursuing an industrial loan company charter under the Federal Deposit Insurance Corp. was necessary for bolstering its growing presence in the U.S. and strengthening its suite of e-commerce services. The proposed bank, named Rakuten Bank America, sought to offer credit card issuing and acquiring, personal loans and business loans and deposits.
Adam Rust?, senior policy advisor for the National Community Reinvestment Coalition, emphasized that the disparity in penalties between ILCs and banks with delinquent Community Reinvestment Act ratings puts the NCRC in direct opposition to new charters.
“The precedent that would have been set for approval as either an ILC or as a credit union would have been problematic. … They’re two very different ways of defining a financial institution, and the idea that [Rakuten] could somehow apply for both is also alarming and seems disingenuous,” Rust said.
