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The Vault
Nov. 12, 2019
Build or Buy: The Best Way to Start a Bank Today
BankDirector
“Build it or buy it?” The question is not just for home buyers — it also applies to those seeking to start a bank.
There are two well-established ways to start a bank and, at any given time over the past 40 years, it has usually been clear which approach made more sense.
In the 1990s, high regulatory hurdles translated into few de novos. And again, from 2008 until 2016, the Federal Deposit Insurance Corp. placed a virtual moratorium on de novos, channeling organizers toward buying an existing small bank to make it their own — a “de facto” de novo. During this period, most “new” banks were recapitalizations of troubled banks forced to sell.
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