A de novo bank any type of bank that is newly chartered that has not been acquired through the purchase of a bank license from a previously licensed bank. That is, a de novo bank is a new license granted by the appropriate agency.
A de novo bank could also be a bank that has opened a new branch or a subsidiary. This could either be a state bank, a national bank, a commercial bank, a savings bank, a thrift bank, among many other types of banks. For example, when a state-chartered bank in California wants to open a branch in Nevada, they apply for a de novo state license from that state.
There is a supervision policy that comes along with de novo banks that is unique to them. The supervision policy lasts a number of 5 years because of past experience in the banking industry shows that most banks begin to experience problems during their fourth or fifth year of operation.
These problems come from many different factors, management is not sufficiently knowledgeable to deal with the intricacies of taking care of a bank, illicit activities begin popping up, lending practices could turn sour, etcetera.
For obvious reasons, a de novo bank application is highly coveted in the banking industry. Although it is not a shortcut it is another route towards starting your financial companies, this is especially rewarding for tech startups.
Institutions like the American Bankers Association are working hard to promote banking de novo activities and to take notice of the obstacles to the formation of new banks to prevent illicit activities and weed out the unwelcome parties.
In 2019 alone, there were 15 registered de novo bank applications. A big step up from the eleven that were registered in 2018 and the 4 in 2017. The last known application of 2019 came from an Ohio based bank called Riverside Bank of Dublin.
Out of all of the de novo applications in 2019, this was the first one that came from Ohio. There wasn’t one state in particular that made de novo bank applications as it is a varied practice across the United States.
A de novo bank could function in many different ways and can perform a number of different activities. Riverside Bank of Dublin will solely focus on individuals and businesses that are both medium and small-sized.
I hope you’ve found this article on De Novo Bank Applications in 2019 to be helpful. For more information, or for assistance in starting an international bank, or acquiring a bank in the United States, contact us at firstname.lastname@example.org