Forming an International Bank

Forming an International Bank

Introduction

Since FDIC became available, banks have prospered in the United States. Certain markets are able to house more banks, but it must be cleared through a charter application to make sure. The Jamaican market is in need of small community banks. Right now, the market is home to major international banks focused on sales. This has also caused higher interest rates in the Jamaican market and a smaller community bank will help bring those rates down (Greenwald, 1990, p. 93).

The amount of money needed to start up the bank in the five Florida cities and four Jamaican cities is roughly $18.6 million. The directors of the bank must contribute 25 percent of this amount, which must be a minimum of five people. The rest of the money will be raised by selling stock to shareholders and becoming incorporated. These costs include construction costs and legal costs with becoming chartered.

In order to be successful and competitive with other banks already in the area, a core competency must be decided and enforced. This competency must be different from the other competitors in order to be successful. Also, certain alliances with other companies may need to be established in order to offer products to be competitive. This is due to the small size of the company and the inability to offer these products on its own.

The purpose of this report is to help establish an understanding of the process of beginning a bank and the amount of capital involved in the process.

Chapter 1

Choosing a Market

The first step in forming an international bank is to choose its location. My main areas of focus will be large tourist cities in Jamaica, and college-towns in Florida. Currently Jamaica consists of megabanks, some based in the United States. The need for smaller community banks is great in this country, especially due to very high interest rates. A small bank in these areas will help bring rates down and may possibly improve the amount of...