Subscribe to the BlogThe year 2010 has also started on a bad note for the US banking industry with eleven banks closing down so far this year, in the first two weeks. The US regular had come out with a list of over 450 banks which were below the standard capital adequacy norms, in August 2009.
Historically, at least 20% to 25% of these banks go bankrupt in the subsequent year. So we can expect the total bank closures in 2010 to be at least 90 to 130 banks. As the unemployment level in US continues to be alarmingly at 10% , we can only expect more individual bankruptcies this year.
That can put negative pressure on the commercial real estate and also residential housing prices.
That in turn can lead to more losses for the US banking industry. And if the US FED starts jacking up the interest rates, we can only expect bank failures to rise.
As of now, nothing seems to be going right for the banking industry in US.
The year 2008 saw only 25 bank closures which itself was a record high. The 2009 saw nearly five fold increase in the bank closures with over 120 banks getting closed down. But for the massive stimulus spending by the government there could have been more bank closures, say analysts.