New fintech bank proposed for Greenwich

Connecticut Banking Commissioner Jorge Perez recently chaired a public hearing for the formation of a proposed de novo bank in Greenwich, to be called Currency Reserve.

Currency Reserve bills itself as a fintech bank, but it will primarily serve customers by giving them direct access to physical deliveries of physical cash.

“The foreign exchange reserve wants to be an appropriately capitalized state bank headquartered in Greenwich, Conn.,” CEO Vivek Tyagi said at the hearing in Hartford. “As described in the application document submitted to the department and reviewed by FS Vector in the feasibility study, we plan to safely and responsibly engage in US dollar banknote distribution.”

Tyagi has a long history in banking, including roles as head of risk management for liquidity and short-term investments at JP Morgan, managing director and chief risk officer at Bank of America Merrill Lynch, and managing director of the investment banking division at Goldman Sachs.

Tyagi also served as head of product risk at Silicon Valley Bank between 2018 and 2019. More recently, vacancies in the risk management team at Silicon Valley Bank were blamed by some analysts and commentators for the bank’s collapse.

According to Tyagi, Valutareserve will fulfill the application requirement that approved banks will benefit the state by contributing to the work of keeping the US dollar as the world’s primary reserve currency. To that end, Tyagi cited his experienced management team as an advantage in launching the bank.

“In addition to [Chief Administrative Officer and General Counsel] Matthew Hurlock and myself, the rest of our management team are very experienced and have deep functional subject matter expertise,” he said. “For good governance, our management team is overseen by a board that has long-standing alignment with the Department of Banking and the Federal Reserve’s principles for the safety and soundness of the U.S. banking system.”

Hurlock has worked for almost 15 years with various law firms, specializing in mergers and acquisitions. Also named on the application was Richard Ravitch, who was lieutenant governor of New York for a short period. He was prevented from serving in most of the role’s functions due to a series of legal battles over the constitutionality of his appointment by David Paterson after Eliot Spitzer resigned in 2009. During his actual time in office, Ravitch focused on tackling budget problems and also served in a number of appointed positions in New York government.

Three applicants are members of Salt Lake City, Utah-based Cynosure Group, a financial services company. Among them is Randal Quarles, a founder and current executive chairman of Cynosure Group and a former member of the Federal Reserve System’s Board of Governors from late 2017 to 2021. Quarles is joined by Zachary Larkin, an executive director of Cynosure. Group with extensive experience in company boards and self-described “adrenaline junkie”, and Gregory Giordano, an associate attorney at Cynosure.

Commissioner Perez had few questions for the applicants, saying he had read all the application materials carefully. However, he posed a philosophical question: “Given the growth of digital currencies, how do you think the whole concept of a bank could be affected by the concept of a digital world?”

“Our belief is that notes have a distinct value proposition that is not being adequately served by the digital alternatives,” Tyagi replied, citing a feasibility study by FS Vector, a consulting firm specializing in services for innovative financial institutions.

Representatives of FS Vector told the commission that the bank is likely to succeed, even if it faces headwinds from changes in the market, or the introduction of a “digital dollar”, and recommended that approval was granted conditional on gaining access to the Master Account and Cash Services Access through the Federal Reserve to obtain dollar bills for distribution, and contract with fully licensed delivery providers to ensure that the bills can be safely delivered.

Commissioner Perez stated that he will provide his decision in writing as soon as practicable.