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Square withdraws bank application, plans to refile

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Square withdraws bank application, plans to refile

Square Inc. has withdrawn its bank application with the Federal Deposit Insurance Corp. in order to improve some aspects of the filing.

A company spokesperson said in an emailed statement that the payment processor withdrew the application and plans to refile it after amending and strengthening some areas. The decision to withdraw and refile was a "procedural step" in the review process, the spokesperson said.

Square applied for a type of bank charter called an industrial loan company, or ILC, in September 2017 to create an entity called Square Financial Services Inc. While the company pulled its application with federal regulators, its application with the State of Utah Department of Financial Institutions remains active, according to the statement.

Chairman, President and CEO Jack Dorsey said in late 2017 that the charter would create an "efficiency" for the company but that the application process could take up to a year to complete. The proposed management team for the chartered subsidiary included a CEO with decades of bank experience.

Square is one of several financial technology companies that have explored opening a banking unit, with varying levels of success. In October 2017, nonbank student loan refinance company Social Finance Inc. pulled its bank application after a major management shake-up, including the departure of its CEO, following a slew of negative headlines.