Yup, a “bancorp”, “banc” or similar does not have a banking licence. It cannot engage in the business of accepting deposits from the public. So it’s hard to see how the public are going to be harmed by it. If it does engage in banking business without a licence, the regulators are going to be down on it like a ton of bricks, and having banc or bancorp or whatever will do absolutely nothing to impede that.
These companies choose bankish names because they want the public to make the connection betweeen them and the genuine, licenced, regulated banks with which they are associated. It’s all about maximising brand value and leveraging goodwill. Not about avoiding regulatory regimes.
Banc of America Securities does provide banking services–investment banking. They are of course relatively high risk and not FDIC insured. Any consumer that went to them, thinking that they are a bank and not just a banc, will not get an investment with the expected level of safety.
I wouldn’t say it’s a scam–you’re the only one that used that word. Weasel words usually aren’t outright scams. But clearly, when Bank of America wanted to diversify, they wanted to keep their name, and the law wouldn’t let them. They chose “banc” since it sounds the same and looks close enough.
Investment banking consists of assisting businesses to raise capital by providing underwriting services, marketing securities, making markets, etc. Investment banks do not accept deposits (unless they also have a commercial banking licence or a retail banking licence).
Anyone in the business of using these services understands that investment banking is a different business, subject to a different regulatory regime from the business of banking, the core of which is accepting deposits from the public. They understand that “banc” is a signal that the entity concerned does not have a commercial/retail banking licence (if it did, it would put “bank” in its name). And, even if they don’t understand that, since they are not depositing their money with it, how are they harmed by not appreciating that they couldn’t do so even if they wanted to?
I suppose that’s true of investment banking specifically, but it’s not necessarily true in general. I had a large amount of cash in a Bank of America account, and they contacted me, asking if I wanted to transition to an uninsured account with a higher interest rate managed by Banc of America Investment Services (now part of Merrill Lynch, I think). Of course they supplied me with all the necessary disclaimers and other information, but it would have been easy for me to ignore all that. The transition was seamless enough that I’d hardly notice–except for the fact that I’m no longer insured under FDIC.
One may argue that Banc ≠ Bank, therefore companies using “Banc” in their names are in no way representing themselves as being a Bank. This is Exapno Mapcase’s argument.
OTOH, one may argue that by using such a similar-looking name, such companies are trying to bamboozle prospective customers or clients into thinking they are some sort of a Bank. This is the alternative view being argued here. (Which, BTW, I tend to agree with.)
If that weren’t the case, why even use the word “Banc”? Why not, y’know, use a name like “Insurance and Financial Services of Italy”? Okay, one could come up with a better name than that. But why use anything resembling “Bank/Banc/Banq/Banx/Banrhjdukahg/BanWhatever” at all?
Weasel word, I sez.
Suggestion: Whenever we see “Banc”, let’s pronounce the c the same way we pronounce the “c” in “pronounce”.
Because “Bank of America” is a valuable brand, with valuable goodwill, which the owners wish to leverage in their investment banking subsidiary. Hence, “Banc of America Investment Services”.
The original company calls itself a bank, and can do so because it’s gone through all the effort of complying with the necessary banking regulations. The other companies (and I’m thinking more of the other investment service companies, not the holding companies that don’t deal with individuals at all), although associated with the bank and sometimes providing similar services, are still not banks themselves. But by calling themselves something similar, some of the cachet that comes with being a bank rubs off on them.
Look, I don’t think it’s actually a problem, and certainly not a scam. It’s just an obvious workaround for a very specific rule. The writers of the law clearly wanted a sharp demarcation between bank and not-a-bank. The word “banc” fuzzes the boundary a bit in the minds of the ignorant public (like myself).
I think my reaction is coloured by the fact that I have a visceral aversion to makey-up words like “banc” and “bancorp”. When I see them, they practically scream at me “Not a bank! Not any kind of creature for which the vast vocubulary of the English language offers an established term!” So it’s kind of hard for me to think that these words might mislead people into thinking that the corporation is a bank. On the contrary, it seems to me that they flag that it isn’t.
I suppose I have the opposite problem. I never guessed that “bank”–outside of the legal classification for a business–had any special meaning in the first place. So for me; bank, banc–same difference. Fortunately I know enough other details to not get in trouble, but I have to imagine that the same isn’t true for everyone.
Well, all words have a special meaning; otherwise they wouldn’t be any use. But your concern is for people who think that “bank” has a special legal/regulatory meaning; an institution, deposits with which are guaranteed by the FDIC. And your concern is that those people will think that a banc is the same thing - in this sense - as a bank.
My point is that “banc” is quite obviously a made-up word, coined by someone who wants to evoke the sense of “bank” without actually claiming it. If being a bank is a good thing, the only reason for Banc of American Investment Services not identifying itself as a bank is that, in fact, it isn’t one. And “banc” is such an obviously synthetic construction that (like “creme”) it calls attention to this. I think the only people at risk of being confused by this are those who don’t know how to spell “bank”. And not many of those people are likely to be factoring an expectation of FDIC cover into their financial decisions.
Not for names, though. Words in names are often totally meaningless, and marketers love to inject misspellings or make up total nonsense for cutesy purposes. Names just have to be distinct identifiers.
It’s more the opposite. For some, “Bank of America” vs. “Banc of America” is just some meaningless spelling difference, no different than the Googles and Flickrs out there. But Bank of America still has the reputation of being a bank, because they are one (and not simply because they have “bank” in the name). Banc of America rides on that reputation, despite not quite offering the same services.
I dispute the obviousness. Cream vs. creme is only obvious to me because I know that food labeling laws are fairly strict, and that you can’t claim that something is cream unless it contains dairy, or is one of the acceptable exceptions. Had I not known that, I’d probably have assumed creme is a cutesy misspelling, or a poor attempt to appear French, or likewise.
Until gotpassword’s post, I didn’t know the same was true of “bank”. Sure, if Banc of America had produced advertising copy that asked me to “open an account at our banc” or the like, it would have made me suspicious. But as part of their name, it wasn’t obvious, since I wasn’t aware of the law, and there are all kinds of other reasons why it might be misspelled.
At any rate, I don’t think it’s a big deal, as I said. There’s enough other information out there that no one has to be confused. I just think the law is probably weaker than its maker hoped it to be.