Nubank applies for US bank charter in global expansion push

[SAO PAULO] Nu Holdings said that it applied for a US national bank charter as the Brazilian fintech seeks to expand beyond the Latin American market.

The digital banking giant, known as Nubank, submitted its application to the Office of the Comptroller of the Currency, according to a statement on Tuesday (Sep 30). The move will help its effort to evolve from a regional platform into a global firm, it said.

“Applying for a US national charter helps us better serve our existing customers based in the country and, in the future, connect with those who share similar financial needs and could benefit from our products and services,” Nubank’s chief executive officer David Velez said in the statement.

The company’s shares were little changed in New York after initially rising on the news and then pairing those gains. At about US$77 billion, Nubank is currently the most valuable publicly traded Latin America financial firm after jostling with Brazil’s Itau Unibanco Holding for that title throughout the year.

A national bank charter “will support Nubank’s ability to innovate responsibly and scale efficiently in the US market, eventually offering deposit accounts, credit card, lending and digital asset custody”, the firm said in the statement. Most of the biggest Brazilian traditional banks have operations in the US, mainly aimed at Brazilian companies and individuals with investments abroad.

Nubank’s US business will be a wholly owned subsidiary, with a board including former US and Brazilian financial regulators and executives. The board’s chairman will be Brazil’s former central bank chief Roberto Campos Neto, and will also include Nubank’s co-founder and chief growth officer Cristina Junqueira.

“Nubank’s core operations remain focused on growing our markets and doubling down on excellence in Brazil, Mexico, and Colombia,” Junqueira said. “Still, we are confident that we have reached a maturity stage that allows us to explore further options and expand our positive impact.”

Nubank recently won government approval for a license that will allow its Mexico unit to operate as a bank. Across all its markets, the company had amassed 122.7 million customers to June.

Given its expansion and some recent hires Nubank has made from the US tech sector, the application for a US bank charter “seems consistent”, Susquehanna International Group senior technology analyst Jamie Friedman wrote. Friedman expects the move to spark questions, including whether the firm targets Latin Americans in the US or the broader US population, and how that might impact margins.

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Citigroup analyst Gustavo Schroden said that the US push is a good initial step, considering the US market’s size. “However, for investors, the primary concern is the potential for management to lose focus,” he added.

Analysts more broadly see upside to the firm’s international expansion, especially as its Brazilian operations mature. Schroden said earlier this month that a broader credit offering in Mexico could lead the local operation to profitability by 2026. Nubank’s second-quarter results showed increased profits and credit quality in Brazil, its most important market, holding up. BLOOMBERG