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Senior Reporter - Finance
After 25 years at Citibank, Elena Sisti decided she wanted to start her own bank. Her husband begged her to reconsider. "He offered me $200,000 not to do this," she recalled. Nevertheless, she persisted. In 2008 she launched Savoy Bank.
The institution is one of only a handful of new commercial banks to open in the U.S. since that time and only the second woman-owned bank in the city's history. The initial one, First Women's Bank, got started in 1975 and changed its name to First New York Bank for Business in 1989, but regulators closed it in 1992 after a pile of real estate loans went bad.
Savoy looks as if it will be around awhile. With just a single branch in a Midtown office building, it has grown to about $350 million in assets, $35 million in capital and 41 employees. Despite having opened just as the financial crisis started and taking five years to break even, last year Savoy generated $4.4 million in profit from serving small businesses, such as supermarkets and gas stations.
"It's been a struggle, but the bank is doing what I wanted it to do," said Sisti, who has handed over the chief executive position to a male colleague but remains on the board and sits on the committee that approves all loans. "We can't grow any faster than this."
Sisti's success raises a lot of questions, beginning with: Why is a woman-owned bank still unusual? Bankers talk all day long about the importance of diversity and inclusivity, but they struggle to back up their words with deeds. In New York, women hold only 21% of the senior-level positions in finance and insurance, down from 23% in 2008, according to figures from the U.S. Equal Employment Opportunity Commission. Bloomberg News recently reported that UBS docked the bonus pay of some women who took maternity leave.
Sisti said she encountered none of that boys' club stuff during the three years that she was organizing her bank. "The female thing never came up," she said.
Still, she talked to 200 potential backers before finding the right 20. Federal regulators would not approve her application because they did not like her plan to focus on Washington Heights, so she turned to New York state regulators. They required that she have a lease, a CEO, a strategic plan and investors committed to putting up at least 30% of the capital. She then had 90 days to raise the rest or the whole thing would be off. Sisti put in $570,000 of her own cash.
The arduous process surely helps explain why the formation of new banks has ground almost to a halt. Since 2008 no new banks have been launched in New York, and only 11 have opened nationwide since 2010. Combine that with a seemingly endless consolidation wave and the number of banks in the U.S. has slipped to 5,450 from 8,000 in 2010, according to figures from the American Bankers Association.
In December the Federal Deposit Insurance Corp. said it was seeking to streamline the application process. Banking groups say regulators need to do more than that for startups. Among other things, they want regulators to ease capital requirements and shorten the application process to no more than 120 days from the average of 174.
"There needs to be a fundamental shift in the overly conservative attitude of regulators towards de novo banking," wrote the Independent Community Bankers Association in a comment letter. "No longer should the FDIC expect that every de novo applicant must convincingly demonstrate that there is zero chance the bank will fail."
Sisti said she could see taking Savoy public one day and building it into a bank with $1 billion in assets. "We can easily get there just doing what we're doing," she said. "Just don't give up control."