In five months, 73 US banks collapse; more failures expected

NEW YORK: With the banking sector continuing to wobble under financial woes 14 US banks on an average are folding up every month, while the count of troubled entities -- those at increased risk of failure -- has jumped to 775.

Indicating that the problems plaguing American banks are far from over, the Federal Deposit Insurance Corporation (FDIC) recently warned of more failures.

So far this year, a staggering 73 banks have failed, most of them small and medium entities. This figure translates into as many as 14 failures every month in 2010.

Meanwhile, the count of 'problem' banks shot up to 775, the highest in nearly 17 years, in the first three months of this year. The same stood at just 702 at the end of 2009.

In May alone, nine entities were shut down. These failures are expected to cost the FDIC, which insures deposits at over 8,000 banks, as much as USD 521 million.

According to the FDIC, 41 banks were shut down in the first quarter of 2010. In April alone, 23 banks went out of business, the highest for any month so far, this year.

The number of collapses are expected to rise in the backdrop of high unemployment levels, which is resulting in increased defaults, especially at small and medium banks.

"There will be more failures, to be sure. The banking system still has many problems to work through and we cannot ignore the possibility of more financial market volatility," FDIC chairperson Sheila C Bair said recently.

In 2009, a whopping 140 banks in the US went belly up.