Kroll Bond Rating Agency (KBRA) released a new research report entitled "Large & Small Bank Performance During the Financial Crisis." The report makes the following key points:
- While the largest banks were not allowed to collapse during the downturn due to the Too Big-to-Fail doctrine, forty percent of the top ten domestic banking institutions (forty-four percent by asset size) essentially failed and required stronger institutions or the U.S. government to intervene.
- Banks with assets below $1 billion represented the largest number of failures in absolute terms, while banks with assets between $1 and $10 billion in assets failed in the highest proportion of their peer group. This failure rate was a small fraction of the Megabank failure rate noted above.
- Asset size is not a predictor of financial strength: with the exception of the Megabanks, which were clearly the weakest, it appears that banks in various size ranges experienced similar trends during the downturn with varying intensities, but no group was significantly stronger than the other during the downturn. As the Too Big-to-Fail doctrine has lost support and community banks continue to bolster their management and infrastructure based on lessons learned during the financial crisis, asset size will not be a predictor of financial strength or survivability in future downturns.
To view the report, please use the following link: www.krollbondratings.com/show_report/2162
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About Kroll Bond Rating Agency
KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).
Kroll Bond Rating Agency
Analytical:
Ben
Stewart, Associate
240-394-4145
bstewart@kbra.com
or
Marjan
Riggi, Managing Director
646-731 2354
mriggi@kbra.com
or
Joe
Scott, Senior Director
646-731 2438
jscott@kbra.com
or
Chris
Whalen, Senior Managing Director
646-731 2366
cwhalen@kbra.com
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