Shares of San Francisco-based fintech SoFi (SOFI) - Get SoFi Technologies Inc Report rallied on Wednesday after the popular mobile-first banking and lending company received regulatory approval to officially become a bank.
SoFi late Tuesday said it received approval from the Office of the Comptroller of the Currency, or OCC, and the Federal Reserve to become a bank holding company. SoFi offers loans, cash accounts and even debit cards but is not technically a bank, instead relying on partnerships with FDIC-insured banks to hold deposits and issue loans.
To become a bonified bank, SoFi last year said it would acquire California community lender Golden Pacific Bancorp and operate its bank subsidiary as SoFi Bank. The deal is expected to close in February.
“This important step allows us to add to our broad suite of financial products and services to better be there for our members during the major financial moments in their lives and all of the moments in between,” CEO Anthony Noto, a former partner at Goldman Sachs and formerly chief operating officer at Twitter, said in a statement.
SoFi was founded by well-known venture-capital investor Chamath Palihapitiya. The company went public in June via a SPAC deal. The company has been on the hunt for a bank charter for more than three years.
Before going the bank acquisition route, SoFi filed application for the charter with the Office of the Comptroller of the Currency. The OCC granted preliminary approval in October.
As of the end of the trading day Tuesday, SoFi shares were down 23% this year. At last check the stock was up 13.76% in regular Wednesday trading.