A nice smaller bank not only took me out for drinks but also got my PPP loan approved in a very short period of time.
That service was significantly better than all the combined service of the larger bank over the prior years.
Something, something trade-offs.... Always trade-offs.
Regional banks do not have a substantive underlying issue and do not deserve to die by a rotating regional bank panic.
“No narrow banks so we can encourage fractional reserve lending, but be responsible!” “Okay, fine, we’ll cover everything.” “Systemic risk!” “Narrow bank now pls?” “No! Fractional reserve lending responsibly!”
Credit Unions are owned by the members instead of shareholders and are non-profit but yea seems very similar to a regional bank. What else are different?
I do wonder though, why SVB became so large compared whereas a credit union like First Technology Credit Unit which manages 15 billion in assets. Wouldn't a credit union be a better fit since they are local at its core. And credit unions serve the financial needs of a specific group of people who share a common interest or affiliation (in this case Tech/VC firms in Silicon Valley).
There's also the 250k insurance but by NCUSIF instead of FDIC
Understood that small regional banks exist and it'd be senseless and disruptive to kill them off now, but if we take them as a historical artifact that we must live with, what actual advantages, in clean-sheet model, do they have, that would counter-act the poster's main point?
In those cases, a relationship between bank employees and the local residents mattered to establish trust between both parties.
Nowadays, a lot of high quality databases can do a lot of the work figuring out a borrower’s credit, so there is less need for those personal interactions, especially for something as simple as home mortgages.
Unless you need a ton of cash real quick (which is rare and getting rarer) it's perfectly convenient to keep using your regional bank even if you've moved across the country. If you do need the cash you call them and have them raise your ATM limit for a day. The overall amount of inconvenience per year is equal or less than dealing with some big stodgy national chain.
For Canada, while geographically large population wise it’s very small compared to the US. The big Canadian banks are targeting a similar sized demographic to California.
I’m less familiar with Europe, but I’m guessing most nations still have prominent national retail banks, with some having an EU wide market? Those national retail banks would effectively be regional in the US.
But many are quite big.
There are ~40 banks with assets over $200bn in Europe vs 15 in the US.
They're historically related to having shareholders which are also local, or backed by local foundations, or have special relationships with the local businesses (like the ones in Italy that will take a wheel of cheese or balsamic vinegar as collateral). Not "bank of $city" tho.
I think that's one of those "citation needed" assertions. At least some explanation.