27 May 2012

Starting your own bank in the USA

One subject that I didn't deal with in my Youtube video on "Debt Annihilation" is the question of how to go about creating your own bank. It looks as though it's not too complicated, at least in the US.

For example, the "How stuff works" website actually has a section entitled "How do you start your own bank?" It gives some of the details for starting a bank in Florida. An important issue appears to be selecting the group of directors:
"The number of directors you must have varies from state to state. In Florida, you must have at least five, and there is no maximum number. These partners have to put up money as an initial offering that shows their level of commitment and helps get the bank going. The required amount in Florida is 25 percent. In other states it may be as low as 10 percent to 15 percent of the total capital needed to start the bank. This group then becomes shareholders in the bank"
The website goes on to say:
"The capital requirements to start a bank often vary greatly from state to state. In Florida, the suggested capital requirement is $6 million for a bank in a metropolitan area and $4 million for a bank in a rural area. In other states, such as New York, that amount might be $10 million or more for metropolitan areas."
Seems pretty cheap to me for a licence to print money. The site then says what you need to provide as documentation.
"...you fill out the charter application and submit it (along with a lot of other information) to the state's board of finance and banking -- or, if you're applying for a federal charter, you'll send it to the Office of the Comptroller of the Currency. Here is the list of items you have to include in Florida:
  • The names and addresses of all of the organizers and the holding company (if there is one)
  • The names of the proposed directors, the CEO, the senior loan officer and the cashier
  • The name and address of the bank
  • The number of shares, par value, and share prices for each share that will be sold
  • The total amount of common stock, as well as surplus and reserves for operating expenses
  • The number of shares of bank stock that each organizer plans to purchase
  • Where the money for purchasing those shares is coming from
  • Names and addresses of proposed investors who will own more than 10 percent of the bank's total stock
  • A completed charter application (form DBF-C-10 in Florida) for each organizer, proposed director and principal stockholder, CEO, senior loan officer, cashier, and all other executive officers
  • Pro forma financial statements
  • An addendum to those financial statements that explains assumptions and strategies to achieve the projected market share for each type of product or service
  • Assumptions used to calculate earnings
  • Everyone involved in the purchase or lease of the proposed bank building
  • Any business or personal affiliations between the bank property seller or lessor and any of the organizers, other bank officers, and shareholders who will own 10 percent or more of the bank stock
  • Copies of location feasibility studies and local zoning laws
  • Copies of results of any environmental tests conducted at the bank's location
  • Projected organization costs (this includes filing and regulatory fees, professional and consulting fees, payroll and payroll taxes, rent, capital-raising costs, printing, postage, telephone and office supplies)
  • Proposed salaries and benefits for bank officers
  • Copies of any employment contracts that may be given to officers
  • Copies of proposed bank policies
  • And finally, your detailed business plan!
There will also be a filing fee, which in Florida is $15,000. Most other states require a similar amount. 
If your application is deemed complete, then a decision will be given within 180 days. If your charter is granted, you will usually have up to one year to open your bank. In all states, you are required to apply for deposit insurance with the FDIC before you can accept deposits from the public."
Good grief! Is that it?

Not happy with creating the bank in Florida? Well, the ehow money site also has a section called "How to start a bank". They give the list of things you need as
  • Business plan
  • Banking and/or business management experience
  • $6 to $10 million 
  • Charter bank application package
They provide links to getting the necessary resources for two other states - California and Wisconsin. Intriguingly there doesn't seem to be any sign of an oath that you have to swear in which you promise not to let on to any outsider that having a bank means that you can print your own money. Maybe you have to do that later when you get the keys to the printing press?

Anyway, in the US it really does looks pretty easy. I'm hoping to find some info on how to do it in Europe. If anyone knows, do leave a message.


  1. Florida: Five partners at 25% … Whoever came up with the regulations had pretty poor grades in maths …

    By the way; have you tried contacting  Soros, Buffet et al on this wonderful idea?

  2. Hi Martin,

    Unfortunately, I don't have George Soros and Warren Buffet's phone numbers or emails. Can anyone help?

    Cheers, Simon