No market for gay and lesbian loans

The board of the Florida-based G&L Bank voted to dissolve the bank, but said its finances were sound and savers' deposits were not at risk.

"The G&L Board of Directors and management have made difficult decisions in order to ensure a return to investors, something that has not always happened with the closing of other internet companies," Kay Griffith, chairman and chief executive of the bank said.

G&L - whose initials stand for gay and lesbian - had little difficulty attracting depositors but was unable to find enough customers for loans, Ms Griffith said.

Savers safe

The bank has been losing about $280,000 a month, with a total loss of approximately $10m since opening in 1999, and will close within 90 days.

Deposits are insured up to $100,000 and savers are expected to get their money back while outstanding loans would be sold to other institutions.

Shareholders will receive about half their investment, which Ms Griffith said was a better return than if it had been sold.

A couple of offers had been considered but both were deemed unsatisfactory.

US online banking

G&L was founded by Steven Dunlap, an inventor and businessman, who was ousted by the bank's shareholders in 2000.

Mr Dunlap has sued G&L claiming the bank's concept, name and trade mark were stolen from him.

While some online-only banks in the US, like NetBank, have turned a profit, most have struggled to attract customers and bring in cash.

G&L joins Wingspan Bank, Compubank, USABancshares and Security First Network Banking in shutting down, scaling back, or selling their operations.

News of the latest failure comes just days after US bank regulators seized the operations of online-only NextBank, claiming it was using "unsafe and unsound practices" that burned up $300m.