Mensah Associates

Bank Formation (U.S)

The United States has a “dual banking system”, meaning that U.S banks can be chartered by any state or at the federal level. Mostly, Banks in the U.S are owned by bank holding companies, which tends to be prohibited from owning entities other than banks or companies engaged in activities that are closely related with the Banking Sector.

Normally it takes as long as a year and the permission from at least two regulatory authorities. We guided you through the collection of information of the organizers, the business plan, finances, capital adequacy, risk management infrastructure and other relevant factors to be filed before the approving authorities.

The proposed bank must be approved for a federal or state charter. The federal or national bank status is approved by the Office of the Comptroller of the Currency while any other state may use a state charter.

Before getting approved the charter status, the Comptroller or the State must determine if the applicant bank has a reasonable chance for success. Then the Federal Deposit Insurance Corporation must approve the bank formation.

Generally, non-US may apply with the same requirements.

Among the requirements set forth by the Bank regulators (i) Five or more individual organizers or sponsors (ii) Detailed biographical and financial information for each individual, director, officer and shareholders, (iii) Proposed compliance with regulatory, governance, community service and risk management requirement, (iv) articles of association and by-laws, (v) Application to the FDIC, (vi) Financial resources to deal with minimal capital and organizing expenses (around $2 million to U.S $10 million).

Furthermore, all insured banks must comply with capital guidelines of their federal regulator. Newly established bank is generally subject to additional criteria that will be required until the Bank is profitable and reliable.

The U.S regulatory deals with different forms of Banks. State-owned banks are unusual. There are investment banking and commercial banking. Commercial banks can issue demand deposits, commercial loans, consumer loans, letter of credit, leasing of real or personal property, etc. Commercial banks may engage as well in trust, limited insurance activities and other fiduciary services if they receive approval for those.

Investment Banks are normally corporations registered and regulated by the SEC and fundamentally are not permitted to take deposits. Some affiliation with commercial banks may be designed. Private banks, although very rare, are usually formed as partnership. Some commercial banks or trust companies may provide private banking services.

The Firm will assist you throughout the process, prepare the fillings and bylaws and advise you on which banking license better serves your purpose.