Following a stress test of all FDIC-insured
banks, at least 758 US-lenders – around one in ten of the country’s
banks – are at risk of failure over the next two years, according
to a report from Invictus Consulting Group.
Based on publicly available data on banks for
the third quarter ended 30 September, Invictus said that without
corrective action to raise capital or merge, the 758 banks are
unlikely to remain viable.
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This is primarily due to the weak recovery,
which could trigger a new wave of loan defaults.
Approximately 200 of these banks are subsidiaries of
publicly-traded bank holding companies.
The 758 banks have total assets of around
$440bn, or roughly $580m on average.
Over the past three years, 389 banks and
thrifts failed, including 90 in 2011.
Kamal Mustafa, chairman and CEO of Invictus,
said:
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By GlobalData“While any possibility of a bank failure is
serious, what makes this situation even more dire is that the
demise of any of these banks would adversely affect their local
communities, especially smaller business people and those seeking
to buy or improve their homes.
“Compounding the problem is the fact that
larger national banks are starting to close down their smaller
branches, so these communities will have even fewer lending
resources.”
Florida has the largest number (72) and
highest share (31%) of vulnerable banks among its
institutions. The 72 have average assets of $539m and
represent almost 25% of Florida’s total bank assets of
$158bn.
Other states with the largest number of most
vulnerable banks include Illinois (69), Georgia (66), Minnesota
(37) Missouri (33) and Tennessee (31). The only states with
no banks rated at risk by Invictus are Alaska, Hawaii, New
Hampshire and South Dakota.
