Rochdale's Bove Said That 150 to 200 More U.S. Banks Could Fail

August 24, 2009 7:34 AM EDT

Today, Reuters reported that Rochdale Securities analyst, Dick Bove, said yesterday that 150 to 200 more U.S banks are likely to fail in the nation's current banking crisis.

He noted that the industry's payments to keep the FDIC going could take 25% of their pretax income in 2010. "The difficulty at the moment is finding enough healthy banks to buy the failing banks," Bove wrote.

Bove said "perhaps another 150 to 200 banks will fail," on top of 81 so far in 2009, adding more stress to the FDIC's deposit insurance fund.

UPDATE: In an interview on CNBC, Bove gave some details on a few points of his note:

1. most of the banks that will fail will be small banks
   
2. the cost of covering these small bank failures will be extraordinarily high for the remaining healthy banks. Bove believes healthy banks will need to set aside as much as 25% of their earnings next year in order to cover these losses.
   
3. "Who's gonna buy the failed banks?" Bove believes that there are not many healthy U.S. banks left, possibly only U.S. Bancorp (NYSE: USB), and the majority of the buying will be done by foreign or private-equity firms.

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