The founder of one the nation's largest health maintenance organizations wants to open Maine's first state-chartered "merchant bank."
Leonard Abramson is seeking permission from state banking regulators to open Maine Merchant Bank LLC in Portland. Mr. Abramson was among a group of investors who had lobbied for the state to create the merchant bank charter.
Mr. Abramson, now a self-employed health-care consultant, sold his $1.8 billion-asset U.S. Healthcare to Aetna Inc. last year.
His application is the first since Gov. Angus S. King Jr. signed legislation creating the charter in April.
Under the new law, the merchant banks-also called small-business banks- are designed to provide debt or equity financing for start-up or undercapitalized businesses that have trouble getting traditional bank loans.
"They can work as collaboraters with the existing community bank network in Maine," said H. Donald DeMatteis, Maine's bank superintendent.
Along with the new merchant bank charter, Maine also created charters to allow state nondepository trust companies, wholesale financial institutions, and uninsured financial institutions. The last could take large deposits from institutional clients and invest in the companies to which they lend.
"We are looking to create a market in which some of these niche banks can operate," Mr. DeMatteis said.
He said the merchant bank charter was needed because businesses have long complained it was difficult to get investment capital. "I think there's always been a view that Maine is a relatively capital-poor state," Mr. DeMatteis said.
Bankers have said they see no threat from the new merchant banks, since commercial banks cannot provide such financing. Besides, the merchant banks are prohibited from soliciting or accepting deposits; they will be funded by investors and corporate borrowing.
The Maine Association of Community Banks and the Maine Bankers Association endorsed the legislation.
The state requires that merchant banks have more than $20 million in initial capital and maintain a capital ratio of 9% to 12%.
