In a Financial Institution Letter, dated May 1, the Federal Deposit Insurance Corporation (FDIC) announced the release of the final handbook designed to help de novo banks apply for deposit insurance.
According to the letter, “the handbook offers guidance for navigating the three phases of establishing an insured institution: pre-filing activities, the application process, and pre-opening activities. It provides useful information for organizers of a new depository institution, and reflects comments from organizers and other interested parties during recent industry outreach events.”
The handbook is entitled Applying for Deposit Insurance – A Handbook for Organizers of De Novo Institutions.
In a Press Release, announcing the availability of the new guidance, the FDIC went on to say, the handbook was, “designed to provide a plain language overview of the requirements and considerations significant to the application process, and to provide organizers a clear and transparent explanation of the path to obtaining deposit insurance.”
In the press release, FDIC Chairman Martin J. Gruenberg said, “In welcoming applications for deposit insurance, the FDIC wants to ensure applicants are well informed about the FDIC’s application processes, and are aware of the tools and resources available to assist in developing an application.”
Why Is This Important News?
Basically, a “de novo” bank is a new bank that has yet to become a member of the FDIC. Such “de novo” banks, or the creation of new banks, has been relatively rare since the financial crisis of 2008.
What the release of the eagerly awaited new handbook really means to the economy and the general public, is that it makes the path to chartering and establishing new banks easier once again.
The release of the handbook is the latest in a series of measures recently enacted by the FDIC intended to stimulate applications for new bank charters. Ultimately, the creation of new FDIC member banks will be good for consumers, and the economy.
MBAF has long supported efforts by the industry and regulators to encourage the creation of more de novo organizations, and we welcome this new handbook.
Understanding the implications of the new de novo application process can be complex. If you would like to benefit from our expertise in these areas, or if you have further questions on this Advisory, do not hesitate to contact our Banks and Financial Institutions Specialists, or call us at 1-800-239-1474.