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De Novo Banking: Advantages and Disadvantages of Using a Holding Company

Posted by Wendell Brock on Thu, Sep 11, 2008

Recently I added a new white paper to download from the De Novo Strategy website about the basics of using a holding company with a de novo bank.  Below is the introductory paragraph; the intent is to post helpful information for people interested in de novo banking.  As always, I wish you the best of success in your endeavors!

The de novo bank can be established with or without a bank holding company. While the existence of a one-bank or multi-bank holding company can greatly increase the flexibility of the de novo financial institution, this flexibility does come at a price. On the positive side, the holding company structure allows the bank to participate in non-traditional banking activities, i.e., business other than taking deposits and making commercial loans. For example, the institution may sell mutual funds, insurance, or underwrite specific securities. A holding company may also borrow money, through the issuance of bonds or other vehicles, and push that capital down to the bank; the bank then enjoys greater financial backing to support business expansion and leverage of its capabilities. Repayments of that borrowed capital are typically structured as dividends from the bank to the holding company.

To download your copy click the link: Bank Holding Company

Topics: De Novo Bank, Bank Holding Company, multi-bank holding company

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BankNotes© is published by De Novo Strategy as a service to clients and other friends. The information contained in this publication should not be construed as legal, accounting, or investment advice. Should further analysis or explanation of the subject matter be required, please contact De Novo Strategy at