Underbanked

DEFINITION of 'Underbanked'

A situation where an underwriter of a new securities issue has been unsuccessful in getting other firms to become members of the underwriting group or syndicate. As a result, the security will not be sold to as many clients as had been desired.


Underbanked can also refer to an individual or business that heavily relies on checks and cash as a mean of funding rather than bank related methods such as credit cards or loans.

BREAKING DOWN 'Underbanked'

An investment banker is underbanked when he or she is facing challenges in acquiring additional members for the underwriting group or syndicate for a new securities issue. If the originating investment banker is unable to find enough firms, he or she may not be able to underwrite the issue - and therefore would be unable to offer the security for sale.

RELATED TERMS
  1. Underwriter Syndicate

    A temporary group of investment banks and broker-dealers who ...
  2. Underwriting Agreement

    A contract between a group of investment bankers who form an ...
  3. Underwriting Group

    A temporary association of investment bankers who wish to purchase ...
  4. Bulge Bracket

    A slang term used to describe the company or companies that issued ...
  5. Underwriting Fees

    Underwriting fees are monies collected by underwriters for performing ...
  6. Underwriting Risk

    The risk of loss borne by an underwriter. Underwriting risk generally ...
Related Articles
  1. Investing Basics

    What is Underwriting?

    Underwriting is a term most often used in investment banking, insurance and commercial banking. Generally, underwriting means receiving a remuneration for the willingness to pay for or incur ...
  2. Economics

    What is a Syndicate?

    A syndicate is a group of professionals that temporarily form into one entity to handle a large transaction that’s too big for each to handle alone.
  3. Stock Analysis

    Betting On America's Underbanked

    With the effects of the "Great Recession" still lingering, the number of unbanked and underbanked Americans continues to grow.
  4. Insurance

    The Rise Of The Modern Investment Bank

    Get to know a little bit about the institutions whose actions help to guide free markets.
  5. Investing Basics

    The Road To Creating An IPO

    Through an Initial Public Offering, or IPO, a company raises capital by issuing shares of stock, or equity in a public market. Generally, this refers to when a company issues stock for the first ...
  6. Economics

    What Does an Underwriter Do?

    In the investment world, an underwriter is a company that helps corporations or other issuing bodies distribute their securities.
  7. Credit & Loans

    What is a Syndicated Loan?

    A syndicated loan is one that involves a group of lenders (called the syndicate) who pool their lending resources to make a loan.
  8. Stock Analysis

    U.S. Insurers Turn A Major Corner

    After suffering, the property and casualty insurance industry is back. The group has reported their first underwriting profit since 2009. That’s an important milestone.
  9. Brokers

    Uncovering The Securities Firm

    Learn about the various departments of a securities firm and the professionals who make it work.
  10. Insurance

    Municipal Bond Tips For The Series 7 Exam

    Learn to distinguish between general obligation and revenue bonds to ace this test.
RELATED FAQS
  1. How does an underwriter syndicate work together on an initial public offering (IPO)?

    Learn how underwriting syndicates work together when helping a company undertake an initial public offering, and learn about ... Read Answer >>
  2. Do underwriters make guarantees to sell an entire IPO issue?

    Underwriters represent the group of representatives from an investment bank whose main responsibility is to complete the ... Read Answer >>
  3. What are examples of risks for all underwriter types?

    Learn about the risks faced by different types of underwriting activity. Explore specific examples of risks faced by insurance ... Read Answer >>
  4. What is real estate underwriting?

    See how underwriters for major lenders scrutinize real estate loans and manage their risk, and learn the origin of the term ... Read Answer >>
  5. What does the underwriter do in a new stock offering?

    Learn the role an underwriter plays for an initial public offering, and the steps an underwriter takes in preparing for an ... Read Answer >>
  6. Under what circumstances might a syndicated loan be arranged?

    Learn about the types of syndicated loans, why some lenders choose to establish or join a syndicate, and why some borrowers ... Read Answer >>
Hot Definitions
  1. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  2. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  3. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  4. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  5. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
  6. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
Trading Center