US startup banks must keep raising capital to meet regulator requirements

New US banks such as Palmer Luckey's Erebor Bank, Openreserve and Augustus will likely need to keep raising equity as deposits grow to maintain required capital cushions. Regulators impose tier 1 leverage ratios of 10–12% on de novo banks versus 5–6% for established ones. Erebor is raising $1.5 billion at an $8 billion pre-money valuation after deposits rose to $7 billion.

• Erebor Bank is raising $1.5 billion at an $8 billion pre-money valuation
• Erebor deposits grew from $4 billion to $7 billion by end of September
• New banks face 10–12% tier 1 leverage ratios; established banks 5–6%
• Openreserve raised $25 million and plans another round before launch