Tuesday, December 30, 2014

"Why Your Bank Is Going To Be Worth A Lot of Money"


"The new bank application department at the FDIC was a little slow in 2014. Before the recession, it was common for the FDIC to get 250 applications per year and approve 159 of those. In 2014, only Primary Bank (in organization) filed an application (still pending). Part of the issue is that if you are crazy enough to want to start a bank you are probably too dysfunctional to handle the management of a bank. Given average ROE below the cost of capital, tight margins, low interest rates, tough competition and too many banks, it is no wonder why more bankers have not applied."

1 comment:

Nathan said...

Brick and mortar banks seem as relevant to the future as department stores. In this case it seems like the absence of new competition has more to do with lack of demand than regulatory moats.