How can you tell that your bank is facing troubling times?

Banks have continued to play a pivotal role in facilitating economic and social development. Government, private sector, communities and families rely on banks to keep their savings, facilitate payments and secure credit for various economic and social activities. One of the key requirements for many bank clients especially when it comes to savings is the aspect of security. Banking with a secure and stable bank goes a long way in preventing the nightmare of losing savings through the sudden closure of a bank. Here are some common signs which point to a banking institution facing challenges or possible closure.

Financial reporting

Transparency and accountability are key principles which govern the banking industry. It is for this reason that banks every now and then release reports which give a good idea of the banks financial details. Avoiding public accountability and transparency quite often points to very troubling times and possible closure.

Deposit migrations

A good and financially healthy bank often attracts a growing number of depositors. To the contrary, a struggling bank records a sharp drop in the number of depositors. Customers should be wise to look out for depositors migration trends.


Banks operate under laid down laws and regulations. Strict adherence to the laws and regulations ensures banks stay out of negative publicity arising out of litigations. Litigation typically arises over transactions or financial products, pricing, disclosure, management and servicing issues. When a bank starts dominating news headlines for litigations, customers should take keen interest to find out more as it often points to instability.

Services and incentives

The banking industry is fiercely competitive with various service providers competing for customers. It is a norm for banks to tailor unique services and products and offer incentives to current and potential customers. When you come across a bank which is cutting back on innovation regarding services, products and incentives, it could be time for customers to find out why. Cutting back on service and product innovation is often a bad sign.

Branches and employees

Technology has transformed the banking industry which has led to a decreased dependence on physical human resource and branches to manage customers. However, a good and financially sound bank will not drastically close branches and lay off employees. Changes to do with branches and employees are managed in a professional manner with customers quite often kept in the know in advance on the impending changes.


Banks that are in trouble tend to go into a defensive posture where they don’t seem interested in new business, and they hike fees to get more out of existing customers. Several banks are adjusting fees because the banking environment overall has changed, but the more extreme the fee hike, the more wary you should be.

The indicators listed above are not definite signs of a closing bank but they are worth paying attention to.


Caxton Central

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