How do they keep $1.08 for every $1 deposited? Do they have some sort of magic money printing machine? Or do I deposit a dollar and only get ~$0.92 in my account? If the latter, that seems like a pretty bad deal.
Yeah. It doesn't sound like a great idea. Sure, the bank can charge fees for maintaining accounts. But what do you do if you suddenly have a large influx of deposits? To maintain the 108% ratio you'd have to raise additional capital, fine. But what happens when deposits fall? Presumably that would reduce the fees collected and thereby reduce earnings per share with no feasible way getting out of the situation.