Magazine article American Banker

Conn. Plans a Charter Requiring Less Capital

Magazine article American Banker

Conn. Plans a Charter Requiring Less Capital

Article excerpt

Worried about the effects of rampant mergers, Connecticut banking officials are drafting plans for a new community bank charter with lower capital requirements, to encourage more start-ups.

Never before has a state regulator designed a charter specifically for community banks, said Ellen Lamb, vice president of public affairs for the Conference of State Bank Supervisors.

A number of Connecticut communities are losing local banks, said John Burke, the state's banking commissioner. He said the new charter and the start-ups it elicited could help small businesses.

Several months ago, Office of Thrift Supervision officials several months bandied around a similar concept on the federal level - a charter designed to meld the bank and thrift charters and appeal to mutual institutions in particular.

"I imagine other states will take a close look" at Connecticut's plans, Ms. Lamb said. "This is a real innovation."

Bankers said Connecticut's proposed charter, requiring only $3 million in start-up capital versus the current $5 million, could help spur establishment of minority-owned banks.

"It would have a high degree of appeal," said John Carusone, president of Bank Analysis Center, a Hartford investment bank that served as a consultant to state officials. "It's the right thing for inner-city community banks."

Bankers, however, expressed reservations about the proposal, which was first announced at the Connecticut Bankers Association convention. …

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