Launched today is BancAlliance, a startup with some big Washington, D.C., names attached to it that aims to create a consortium of 100 community banks to big on large commercial loans.

Here’s how the Wall Street Journal describes the venture:

BancAlliance’s goal is to help firms with assets between $200 million and $10 billion move beyond real estate by pooling the resources of about 100 banks so they can compete for larger loans traditionally financed by big banks like Citigroup Inc. and J.P. Morgan Chase & Co.

BancAlliance will identify potential lending opportunities for banks and then offer member firms a chance to underwrite a portion of the loan. The firm also will put up some of its own money so that it retains some of each loan’s risk.
 “This is designed to give large-bank capabilities to small banks,” Mr. Sachs said. While a small bank in Kansas might not be able to compete for a $100 million loan needed by a global manufacturer, Mr. Sachs said a consortium of 100 banks would have the resources to underwrite that business. …

BancAlliance will also attempt to help relieve member banks of real-estate-related assets by purchasing loans through a fund it intends to start. The fund would raise money from institutional and other investors and purchase real-estate assets from banks or other institutions.

My question is, what’s the business model for BancAlliance? It is all very nice to try to help “Main Street Financial Institutions,” but I imagine, as a commercial venture, BancAlliance will take at least a point (and probably more) for its troubles, and that could translate into some serious revenue, assuming it can close more than a handful of large commercial loans annually. I’ve asked BancAlliance for details on its pricing and business model. 

Obviously, BancAlliance is going up against some formidable competition — namely, every large commercial bank in the US. Whether it can harness 100 banks to compete on par with the Bank of Americas and Wells Fargos of the world is anyone’s guess. I’d say it will do OK, but not eclipse the existing commercial banking ecosystem.