What is a Bank Company?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 15 November 2019
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While many people have an understanding of what is meant by a bank, a lesser number of persons will be acquainted with a bank company. Essentially, a bank company is defined as the business entity or group that actually owns one or more banks. A bank company may be set up as a holding company or as a general financial institution that includes the operation of at least one bank within the family of company operations. Here is some information about the bank company, and what is required in order to operate.

One of the first things to understand is that bank companies have to operate under the direction and with the approval of the government where the bank company is located. In the United States, this means that the bank company must apply to and be approved by the governors of the Federal Reserve System before the bank company can begin fully operate. This will also include recognition by the Federal Reserve Bank. In most cases, this means being able to prove that there are at least the minimum required assets to back any venture that is taken on by the bank company, and that there is a reasonable amount of experience and expertise presented among the operators of the bank company. Without meeting the minimum standards imposed by the government, it is impossible to set up a bank company that can begin the process of operating banks within that country.


Just about every country has some sort of equivalent to this sort of process. The reasoning is that the stringent requirements for establishing a bank company are necessary to protect consumers from investing their money in checking, saving, and money market accounts, only to have the business venture close due to a lack of operating capital and poor decisions on the part of the owners. In effect, the criteria necessary to operating a bank company protects the consumer from losing his or her hard earned money, and also helps to protect the economy from suffering a serious blow, due to the failure of a financial entity.

Of course, the types of requirements that must be met in order to establish a bank company vary from one country to the next. For several decades, the attraction of offshore registration for a bank company has been a very popular option. In some cases, the minimum amount of assets required is less, and the actual operating structure of the bank company may not have to be quite as well defined. This can be an advantage for a company that wishes to enter the financial sector and open a bank, but has little prior experience in banking.


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