ICBA, AABD Express Concern with Lack of New Bank Charters
Washington, D.C. (Dec. 2, 2013)—The Independent Community Bankers of America® (ICBA) and the American Association of Bank Directors (AABD) today expressed concern that the Federal Deposit Insurance Corp. (FDIC) has only approved one new bank charter deposit insurance application since 2011. In a joint letter, ICBA and AABD wrote that the FDIC's policy on de novo banks adopted in 2009 makes forming new banks prohibitive, and they called on the agency to review its policies and procedures on de novo applications.
'[A] policy that effectively prevents the formation of de novo banks at all, or only in severely limited circumstances, raises questions whether that kind of restrictive policy is necessary and whether the public interest is served by making it virtually impossible for de novo community banks to be formed,' ICBA and AABD wrote. 'We believe that there are less restrictive policies that will provide comfort to the FDIC and other bank regulators that de novo banks will not become a material risk to the [Deposit Insurance Fund].'
The FDIC policy in question extends the agency's business-plan requirements from three to seven years for state non-member bank applicants. Based on conversations with the FDIC, it also requires applicants to raise capital prior to opening that would be sufficient to maintain its leverage ratio at a minimum of 8 percent for the full seven years based on the applicant's pro forma financial statements.
ICBA and AABD noted that there have been no new laws or regulations that would cause the FDIC to adopt such a policy. The associations suggested alternative policies for de novo banks and said that a more flexible supervisory process that is tailored to the risk profile and business plan of de novo applicants would be better than the current one-size-fits-all policy.