U.S. rejects bunq’s bank charter application over capital, board experience and profit forecasts

The Office of the Comptroller of the Currency (OCC) says it denied Bunq’s application over „significant supervisory and compliance concerns”. The Dutch digital-only bank – Europe’s second largest neobank – failed to clearly explain how its US operations would be capitalised, while the regulator also raised concerns about its experience with unsecured credit cards.

The Application is sponsored by a proposed bank holding company, Bunq US Holding LLC (US Holding). The majority of US Holding will be ultimately owned by a single individual, Ali Niknam.

Bunq USB proposed to offer two core product lines: (1) deposit accounts and (2) unsecured credit cards. Bunq USB planned to be subscription-based with four subscription plans for personal and business users. The subscription prices would range from free for the basic tier and increase in price if the customer wanted additional features. Bunq USB anticipated generating revenue primarily from monthly subscription fees and card network interchange payments.

According to the OCC, the primary factors and deficiencies on which the decision is based include the following.
1. The Application does not demonstrate that bunq USB has capital that is sufficient to support the projected volume and type of business.
1.1. The organizers did not provide sufficient support for their claims regarding the initial capitalization of bunq USB. During the application process, the organizers provided several alternatives for where bunq USB’s initial capital would originate including private holdings and a dividend from bunq BV. However, no information supporting that capital would be available from the sources was provided.

1.2. In addition, the amount of capital proposed would have been insufficient to support the projected volume, risk profile, and type of business in the competitive U.S. market. Even when the organizers increased the initial capital levels, no supporting analysis was provided to demonstrate how the revised proposed capital amount would meet bunq USB’s risk profile, specifically given the unsupported loan loss assumptions and proposed allowance for credit losses that the OCC does not consider credible based on peer analysis.

The Application proposed an initial capital injection of $50 million. While the Application stated that this initial capital would come from Mr. Niknam’s personal holdings, additional information provided to the OCC indicated that the capital would come from a dividend from bunq BV to Mr. Niknam. Despite several written questions and questions during OCC interviews, bunq USB
never clearly articulated how it would be initially capitalized and supported its availability.

During the application process, bunq USB submitted revised financial projections which stated that the initial capitalization would be $58.3 million without providing details as to the changes made and the assumptions for the revised financial projections. Additionally, no information was provided as to the source and availability of the additional capital support.

In light of these deficiencies, the Application does not demonstrate that bunq USB would have sufficient capital to support the projected volume and type of business.

2. The Application does not demonstrate that bunq USB has competent management or board of directors with the ability and experience relevant to the types of services to be provided.
2.1. The proposed management and board, including the proposed President and CEO, did not demonstrate knowledge, experience, or sufficient competence relevant to the bunq USB’s principal lending product, unsecured credit cards.
2.2. Although bunq USB’s proposed business plan is similar to that of bunq BV, the proposed directors did not demonstrate an understanding of the differences between the U.S. and European markets and the differences in credit and credit risk despite one of the primary business lines of bunq USB being unsecured credit cards.
2.3. Given the absence of relevant credit experience and direct experience in unsecured credit cards, the OCC believes that management and the board do not have the ability to effectively oversee bunq USB’s principal product and ensure a safe and sound institution.

The proposed President and CEO has little knowledge of national banking laws and regulations, proposes to be part-time, and plans to allot a large portion of his time to entities other than bunq USB, as he will continue to serve on the board of other related entities. Additionally, the proposed President and CEO plans to spend a majority of the year outside the United States.

In light of these deficiencies, the Application does not demonstrate that bunq USB would have competent management or board of directors with the ability and experience relevant to the types of services to be provided.

3. The Application did not demonstrate that bunq USB can reasonably be expected to achieve and maintain profitability.
3.1. bunq USB’s delinquency rate is not adequately supported as it is based upon bunq BV’s projections in the European market. The proposed business plan does not provide sufficient evidence to suggest that the allowance for credit losses provides appropriate coverage for an unsecured credit card portfolio. The proposed allowance for credit losses is below other credit card banks supervised by the OCC. While bunq USB submitted revised financial projections that increased the allowance for credit losses, no analysis supporting the revised financial projections was provided and the assumptions underlying the proposed
allowance for credit losses were not credible based on peer analysis.

3.2. The business plan and marketing plan were inadequately supported and unrealistic given competition for the unsecured credit cards in the U.S. market. bunq USB failed to consider and plan for expenses that would likely be necessary to compete effectively in the market given its lack of name recognition in the U.S. market.
3.3. The proposed directors’ and proposed management’s lack of knowledge and experience with bunq USB’s principal product and the lack of capital necessary to fund the business plan also do not support a conclusion that bunq USB can be expected to achieve and maintain profitability.

In light of these deficiencies, the Application does not demonstrate that bunq USB can reasonably be expected to achieve and maintain profitability.

4 The Application did not demonstrate that bunq USB will be operated in a safe and sound manner.
4.1. bunq USB’s business plan and marketing plan, including its projected delinquency rate and allowance for credit losses as well as projected expenses, were inadequately supported, providing inadequate coverage and funding for the proposed principal product.
4.2. The OCC considered bunq BV’s history of operations and profitability, including information provided from other regulators.
Although bunq BV started commercial operations in 2015, it did not have a full year of profitability until fiscal year 2023, which appeared to be largely driven by European Central Bank interest rate changes. When rates declined in 2024-2025, bunq BV’s profits also declined. While the cashflow from reserve balances is a core source of income, these trends show the limitations on fee-based subscription models and the inherent interest rate risk in the business model. The organizers have not demonstrated how they will appropriately manage the risk of bunq USB’s proposed business which may involve different and additional risk than bunq BV’s European business.

In light of these deficiencies, the Application does not demonstrate that bunq USB can be operated in a safe and sound manner.

5. The Application did not demonstrate that bunq USB would have organizers who are aware of and understand national banking laws and regulations, and safe and sound banking operations.

5.1. The organizers as a whole lacked sufficient background and experience in banking and lacked knowledge of the laws and regulations that would govern bunq USB.
5.2. Although some of the organizers had prior experience at banks, this experience was limited to specialized areas like wealth management and information technology. Additionally, although Mr. Niknam has current experience in banking as the CEO of bunq BV, bunq BV is not subject to U.S. laws and regulations.

In light of these deficiencies, the Application does not demonstrate that bunq USB would have organizers who are aware of and understand national banking laws and regulations, and safe and sound banking operations.