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Who Starts a Bank in 2009?

For some people, the question carries this subtext: Who has the audacity?

The reasoning goes like this: Enormous erosion has taken place in the banking industry during the last two years—and during this century. The global banking infrastructure has eroded. Credibility in the system has eroded. So who would possibly come forward to stake a claim in banking, post-2008? Who’d have the nerve, after all that’s been said and done?

Here is the problem with this reasoning: it doesn’t represent reason, but emotion—anger and outrage toward bankers who’ve misbehaved.

In fact, some bankers did misbehave, and in doing so, contributed to the worldwide financial crisis.

But other bankers were exemplary.

Of course the temptation is to blame all bankers: anger and outrage are rampant in a recession. Look closely at the players on banking’s current playing field, though, and you’ll find that not every banker out there is to blame for the crisis.

In fact, not everyone out there is even a banker….

The Business Proposition
Starting a bank in 2009 can also provoke financial suspicion, as in Who would be crazy enough to go into the banking business in 2009?

It’s a legitimate question. At face value, banking is a less attractive business proposition post-2008 compared to the pre-crisis era. For one thing, regulation has increased—as it always does in the aftermath of economic crisis. Now there is greater scrutiny over more components of the banking industry than ever before. There is oversight of particular financial instruments. There is hawk-like attention being paid to bankers’ pay. The scrutiny extends to the economic policies of individual countries; even formerly regulation-resistant powers like the United States are calling for increased transparency.

And who wants to operate in such a restricted environment?

Another business obstacle exists for bank start-ups: larger mandatory capital reserves. Risk-taking is out, caution is in, and banks are obliged to have bigger buffers. That way, credit markets can’t wreak havoc as readily.

And who wants to provide such considerable capital reserves?

Who We Are,
Why We’re Here:
United Takes a Position

All of us at the United group have experience in financial services—most of us longstanding experience. But a substantial number of us come from the Trust business—and not banking per se.

Why are we telling you this? Is it a bid to distance ourselves from the troubled banking industry?

Hardly. We’re moving into banking, not away from it. We’re expanding into banking, knowing the experience we’ve gained in Trust is relevant here. We think our financial expertise is called for in banking. Solutions are needed, and we can contribute.

We’re comfortable operating in a regulated environment; the chairman of our Trust business pioneered onshore regulation.

And we believe that higher capital reserves are correct; whoever said a 45:1 ratio was appropriate, responsible?

We started United Bank in 2009 for good reasons. To provide sustainable banking services. To help restore credibility in the banking industry. And to make a profit.