ABA raises questions about Rakuten plan to obtain regulatory approval for US bank
The American Bankers Association has come out against a plan by Japanese e-commerce site Rakuten Inc. to obtain a charter to operate in the U.S.
Rakuten, on Friday, announced that it would seek regulatory approval to obtain an industrial bank charter in the state of Utah. The plan calls for an application through its Rakuten Card unit to establish a bank that would offer business loans and deposits, personal loans and issue and acquire credit cards.
However, the ABA immediately issued a statement raising concerns about privacy issues and potential conflicts of interest.
"As Japan’s largest e-commerce site, Rakuten is a major technology firm engaged primarily in non-financial activities," Rob Nichols, president and CEO of the ABA, said in a statement. "Allowing Rakuten to participate in banking activities would raise important questions about the free flow of credit, consumer privacy and possible conflicts of interest — questions not raised by current ILC charter holders."
Nichols said the ABA looks forward to learning more about the application and discussing the implications with members, including what this move could do in terms of public confidence in the banking system.
He asked the FDIC to "rigorously review every aspect of the application" to make sure it met all the standards of the charter, including community needs.