Enova Abandons $369M Grasshopper Bank Deal, Blasts Opaque Regulatory Process
Enova Abandons $369M Grasshopper Bank Deal, Blasts Opaque Regulatory Process #
Enova International has abandoned its planned acquisition of digital business lender Grasshopper Bancorp, withdrawing regulatory applications and accusing federal regulators of applying standards vulnerable to political influence rather than statutory merit.
The Chicago-based online lender announced Sunday that it had pulled its pending applications with the Office of the Comptroller of the Currency and the Federal Reserve’s Board of Governors to acquire New York-based Grasshopper Bancorp. The deal was valued at approximately $369 million.
In a statement, Enova CEO Steve Cunningham said federal regulators have failed to establish clear guidelines for nonbank companies seeking to enter the chartered banking system. “Without clearly articulated standards, the process is susceptible to political pressure and outside advocacy, rather than being guided strictly by the statutory factors that should govern it,” Cunningham said. He added that Enova had responded to all regulatory requests throughout the application process and believed its filing satisfied the relevant statutory criteria for approval.
The withdrawal came after state attorneys general had applied pressure on regulators over the proposed deal. Cunningham also argued that banking rules and regulatory attitudes had not kept pace with the credit needs of consumers and small businesses served primarily outside the traditional banking system, a market Enova has long targeted as an online lender.
According to American Banker, Enova has withdrawn its applications but has not formally terminated the underlying merger agreement with Grasshopper. The deal contains a $5 million termination fee payable by Enova.
Enova shares fell more than 25% in morning trading as investors weighed the abandoned deal’s implications for the company’s strategic direction. Without a banking charter, Enova continues to operate at a funding-cost disadvantage relative to deposit-taking competitors.
The company reaffirmed its financial guidance for both the third quarter and full year 2026. It expects approximately 25% revenue growth and roughly 30% adjusted earnings-per-share growth in the third quarter. Enova also said it would accelerate its share buyback program, with $349 million remaining under its existing board authorization as of June 30.
The outcome points to the regulatory execution risk nonbank lenders face when pursuing bank charters through acquisition. Cunningham’s remarks suggest the company views clearer federal standards as a prerequisite for such transactions to advance.
Copy link