The Shelf Charter: An Overlooked Pathway to Banking
President Kennedy once remarked that the Chinese character for 'crisis' reflects both danger and opportunity. While not technically accurate, the spirit of his statement is conducive in assessing today's banking landscape.
Financial sponsors, technology companies and other operators seeking to obtain bank charters must navigate capital-market and timing challenges to capitalize on unique opportunities afforded bank charter recipients. For these applicants, the shelf charter represents a rare but overlooked pathway into banking.
What is the Shelf Charter?
A shelf charter is a conditional, non-operational bank charter typically granted by the Office of the Comptroller of the Currency (OCC) or relevant state licensing authority. This charter allows for broader participation by private equity and other nonbank investors in acquiring certain deposit liabilities and assets from failed institutions in FDIC resolutions (as nonbank investors cannot legally assume FDIC-insured deposits of a failed bank).
For fintechs, sponsors, and holding companies seeking to buy rather than build, shelf charters can create regulatory access and transactional speed, without the burden of immediate operational overhead.
Unlike a traditional charter that requires a fully operational institution from day one, the shelf charter offers conditional approval but remains dormant until activated. This typically occurs upon the consummation of an FDIC-assisted acquisition. The shelf-charter approach affords applicants more time and flexibility before launching full bank operations.
As a practical matter, nonbank investors are often precluded from participating in failed-bank deals. This is because only FDIC-insured institutions can hold deposits. The failures of Silicon Valley Bank, Signature, and First Republic underscored regulators’ preference for chartered institutions in resolution processes. As a result, a charter is not just a regulatory requirement but a competitive advantage, and one that affords a buyer greater leverage in the FDIC bidding process.
In late 2023, the OCC quietly revived the shelf-charter tool by approving Porticoes Capital as the first new shelf charter in more than a decade. This approval marked a return to this little-used structure with renewed relevance in today's market.
Shelf Charter vs. Traditional Charter
Who Should Consider a Shelf Charter?
Shelf charters are most appropriate for:
- Private equity funds and credit sponsors with M&A capability in financial services
- Fintechs and digital-asset firms ready to internalize regulatory infrastructure
- Holding companies and family offices pursuing long-term banking platforms
- Seasoned operators seeking to lead new regulated entities via acquisition
Lessons from the Field
Members of our team were directly involved in one of the earliest shelf charter transactions: the acquisition of Premier American Bank in Miami, Florida. This deal showcased how the shelf charter can enable qualified buyers to move quickly and strategically in FDIC-assisted acquisitions. Read the OCC’s release here.
What It Takes
Shelf charters are not shortcuts—they require a strong organizing team, credible business plan and regulatory alignment, management, governance, and compliance plans. Applicants should expect to satisfy certain traditional bank charter requirements as well:
- A qualified board and management team
- Direct engagement with regulators
- Capital adequacy requirements
- Compliance readiness
However, unlike a traditional charter, applicants do not need to operate or actually fund the bank until timing is appropriate, which is advantageous given uncertainty in the current environment.
The OCC does not issue shelf charters regularly. These are cyclical tools used during times of market volatility and when the FDIC anticipates future resolutions, thus needing to expand its pool of qualified buyers at the ready.