Start a Bank FAQ
How can I operate my own bank?
There will be employees in the jurisdiction where the bank is formed. The employees will be experienced locals who have worked previously in the banking industry. If we have contacts in the jurisdiction we would be glad to provide assistance and guidance in obtaining such employees
How can I market my bank?
The bank will primarily be marketed online. The bank cannot generally advertise directly outside of its jurisdiction unless approved. For example, a bank not licensed in the USA can have a website and people from the USA can visit the website. But the bank would need to have a license in the USA before it can advertise on US television radio or other such regional media.
What rules and regulations must I follow?
Each jurisdiction has its own set of regulations. There is generally a minimum amount of capital a bank must hold in order to maintain adequate liquidity. There are annual and other reporting requirements to submit to regulators so that they can analyze the health of the bank in order to maintain depositor safety.
What kind of accounts and lines of credit can I set up for my clients?
Again, this is regulated by the jurisdiction in question. For example, a bank would typically want to have a certain amount on hand for withdrawals, a certain amount invested in US Treasury Bonds, for example, and a limited amount in loans on real estate, automobiles and others. The allocation into various vehicles should be ascertained by licensed legal and accounting counsel along with experienced bank directors.
How do I determine interest rates?
This is determined by what the market dictates. Interest rates fluctuate over time. Thus, again, this should be ascertained by licensed legal and accounting counsel along with experienced bank directors.
How do I provide the banking services, i.e. check books, credit and debit cards, etc?
Credit and debit cards are common internationally. However, checks are not typically used significantly outside of North America. Debit and credit cards are offered in association with companies that provide ATM services for banks.
Yes. Most startup banks hold funds in a larger financial institution. Once the bank has significant assets to justify its own routing number, IBAN or Swift code, then one of those bank codes can be obtained when the finance of the bank justify its acquisition.
How do I get clients?
The clients tend to contact the bank from its website. One may also market the bank by calling professional people, such as certain attorneys and accountants who refer clients to international banks. Many larger banks have marketing departments who call wealthier clients soliciting business. You will need to check with legal counsel to make sure that your efforts comply with applicable law.
How to I promote either a Hedge Fund or Offshore Bank?
Again, the clients tend to contact the offshore banking institution or hedge fund manager from its website. One may also market the bank by calling professional people, such as certain attorneys and accountants who refer clients to international banks. Many larger banks and hedge funds managers have marketing departments who call wealthier clients soliciting business. You will need to check with legal counsel to make sure that your efforts comply with applicable law.
What are the annual compliance procedures and fees?
This varies by jurisdiction. Annual financial reports and annual license renewal fees are some of the regularly scheduled compliance procedures. You will also need to be prepared for your due diligence (Know Your Customer, KYC) procedures to be reviewed. Do you have an original utility bill showing residential address, a notarized passport copy and reference letter on file from each depositor? Items such as these are inspected by regulators.
Is there a regulatory authority?
Yes. Each jurisdiction has its own regulatory authority that regulates financial services to make sure you comply with local and international law and regulations. Expect your books and records to be inspected. Compliance is mandatory in order to keep the regulators happy. This is for your protection as well as to maintain the health of your institution and that of your depositors.
The above information is general in nature and is not to be considered tax or legal advice. If such advice is needed the services of a licensed accountant or attorney should be sought.