Market Share Caps

In 1994 Congress allowed states to raise, lower, or abolish the bank deposit cap, which says that banks may only have 30% of all the deposits in the state (they are limited nationally to 10%). Banks may exceed the limit by attracting new customers, but they may not grow above the limit by acquisition. Most states chose to keep the 30% level. Two - Michigan and Utah - abolished the cap. New Mexico raised it to 40%, and several states lowered it. The lowest is in Iowa at 10%. Interestingly, Iowa and North Dakota, two states that lowered the cap, have one bank per 4,000 people, while Michigan and New Mexico have about one per 14,000.

Rules:

• Iowa
  Iowa is the only state where the cap has actually been an issue. Norwest has held 9.9% of statewide deposits since 1992 and has demanded each year that the legislature raise it--a proposition strongly opposed by the state's banking and credit union associations. More...
  
  
• Missouri
  It is unlawful for any bank holding company in Missouri to obtain control of any bank or depository financial institution if the total deposits in such bank or institution together with the total deposits in all banks and depository financial institutions in Missouri controlled by the bank holding company exceed thirteen percent of the total deposits in all depository financial institutions in the state, determined as of December thirty-first of the most recent year for which totals are available. More...
• Nebraska
  An interstate merger transaction shall not be permitted if, upon consummation of such transaction, the resulting bank or its bank holding company would have direct or indirect ownership or control of deposits in Nebraska in excess of twenty two percent of the total deposits of all banks in Nebraska. More...
• Federal Law
  The 1994 interstate branching law says that no bank may control more than 30% of a state's deposits or more than 10% of the nation's deposits. (Congress did, however, allow states to raise, lower, or abolish the bank deposit cap. To date Iowa, Missouri and Nebraska, among others, have lowered the 30% cap). Banks may exceed the limit by attracting new customers, but they may not grow above the limit by acquisition. More...