So You Want to Buy a Bank?
WHY YOU SHOULD CARE
Because banks are all owned by somebody. Why not you?
Banking is one of the most misunderstood industries. Most people view it as a utility (electric, gas … and banking), and don’t understand that people own banks — all of them. Yes, some of them, especially the large national banks, are publicly traded, but most of the 5,500 banks in America are privately owned. Today, I own OneUnited Bank, the largest Black-owned bank in America. But when I first had the chance to jump in 20 years ago, despite my Harvard Business School training and seven years working in financial services, including Bank of America and American Express, I was still incredulous that I could actually buy a bank.
There are currently only 19 Black banks in America out of more than 5,500 financial institutions. The reality is that the vast majority of banks are White-owned and the vast majority of Americans bank with White-owned institutions. That is the norm. In addition, the history of banking, from financing slavery to Jim Crow to redlining to predatory lending, has created barriers for the Black community to build wealth, sometimes systemically and intentionally. However, Black banks are more likely to hire Black people and lend to the Black community.
You don’t have to be Black to #BankBlack.
So … how does someone buy a bank?
- First, buying a bank is similar to buying any company. You invest in the stock or buy the assets and become owners. Today, the required investment can be as high as $50 million — but a group of investors can pool their money to get there.
- Second, you must be approved by bank regulators who require banking experience and a “clean record.”
- Third, you need a team to manage the bank. Unlike typical companies, banks must comply with extensive banking regulations, balance the need to make money with the need to manage risks (such as credit and fraud risks) and meet community reinvestment needs.
Although buying a bank can be a long and intense journey, it’s important for the Black community to own banks and other businesses.
At OneUnited Bank, we promote the #BankBlack movement to show that America can overcome the historical challenges that the Black community has faced with financial institutions. We hope to rebuild trust and be a source of pride. Many of our customers say that for the first time they are experiencing joyful banking. Some of our elderly customers say they had never been in a bank before joining OneUnited Bank.
We serve everyone and need everyone’s support. I always say, “You don’t have to be Black to #BankBlack.” Our customers are helping us overcome a history of disenfranchisement, and their support — as allies — is important. On this journey, we focus on promoting financial literacy because banking should not be misunderstood, but, at its best, used to build wealth and develop communities.