No New Banks Were Created In 2011

Posted by Orb Staff on March 05, 2012 No Comments
Categories : Residential Mortgage

11043_delinquencies No New Banks Were Created In 2011 Not a single de novo bank charter was issued last year, according to an analysis by the Financial Times.

According to the Financial Times, three new banking charters were reported by the Federal Deposit Insurance Corp. (FDIC) – the lowest annual number since the regulator's records began in 1934. However, all three were based on takeovers of failed existing institutions – there was no de novo bank established during 2011. In comparison, three de novo banks were created in 2010.

Gerard Cassidy, banking analyst at RBC Capital Markets, attributes the lack of de novo banks in 2011 to low interest rates and burdensome financial regulation. ‘Investors who create banks do it primarily to make money, and the banking business is not as profitable today as it was,’ he says.

Separately, the FDIC announced another bank failure on Friday: Global Commerce Bank, based in Doraville, Ga. The FDIC entered into a purchase and assumption agreement with Metro City Bank, also based in Doraville, to assume all of the deposits of Global Commerce Bank.

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