How do you start your own bank?
What if you wanted to start
your own bank? Do you just rent some space, put out a sign and
started taking deposits? Not exactly. Let's look at the steps you
have to go through in order to start your own bank. The rules and
requirements vary from state to state, so in this article we'll use
the requirements from the state of Florida.
The
Organizing Group
Just
as with any business, you'll first have to make some pre-planning
decisions -- like who your partners (called the organizing
group)
will be. You'll also have to write a business
plan.
All of these things will be taken into consideration when you apply
for a state or federal charter.
A charter
is an agreement that governs the manner in which the bank is
regulated and operates. It authorizes the organization of the bank by
either the state or federal agency. The agency that charters the bank
is primarily responsible for protecting the public from unsafe
banking practices. It conducts on-site examinations to make sure the
bank's financial condition is good and that the bank is complying
with banking laws. State charters and federal charters typically do
not differ too much in the way the bank conducts business. They do,
however, differ in other areas. For example, in Florida, a state bank
is not required to be a member of the Federal
Reserve System,
while federally chartered banks are. Also, state-chartered banks are
regulated by state agencies, while federally chartered banks are
regulated by federal agencies.