New York, October 18: Inching towards the century-mark, a staggering 99 US banks have gone belly up so far this year, indicating that the banking sector continues to be shaky.
This year’s toll is about four-fold that of 25 failures in 2008, with an average of nearly 10 banks collapsing every month.
The Federal Deposit Insurance Corporation
(FDIC), which insures deposits of more than 8,000 financial institutions, recently said 416 entities are at risk of failing.
On Friday, the authorities shut down San Joaquin Bank, making it the fourth bank failure this month. The failure would cost FDIC’s Deposit Insurance Fund USD 103 million.
As on September 29, San Joaquin Bank had assets worth USD 775 million and deposits of USD 631 million.
The three other entities which collapsed this month are Warren Bank, Jennings State Bank and Southern Colorado National Bank. The four failures together would result in an expense of USD 396.3 million.
Even as the economy is showing signs of stabilisation, bank failures are anticipated to rise in the wake of increased unemployment which could result in higher defaults.
Since July, a whopping 54 banks — more than double the total failures in 2008 — have shut down.
Last month, 11 banks failed while July saw 24 entities go out of business, the highest for any month in 2009.
Since the collapse of the then Wall Street major Lehman Brothers in September 2008, a whopping 114 banks have failed.
America saw the biggest bank failure of 2009 in August, when Colonial Bank, which had assets worth USD 25 billion as on June 30, went belly up.
The collapse of Colonial Bank was estimated to cost FDIC USD 2.8 billion.
The FDIC has projected that over the next few year it would incur USD 100 billion in failure costs.
To shore up its funds, recently the agency floated the proposal seeking banks to pre-pay fees, which would boost the same by USD 45 billion.
First State Bank, Vantus Bank, InBank, Irwin Union Bank, Venture Bank, Bradford Bank, CapitalSouth Bank, Community Bank of Nevada and ebank, are among those which went out of business this year.
Interestingly, for the first time in over three months no American bank failures were reported for the week ended October 9.
–Agencies