Related News

Home » Business » Finance

Seizure of thrift bank to cost US$4.9b

THE federal seizure of struggling Florida thrift BankUnited FSB is expected to cost the Federal Deposit Insurance Corp US$4.9 billion, representing the second-largest hit to the FDIC's insurance fund since the financial crisis began felling banks last year.

By law, thrift banks must have at least 65 percent of their lending in mortgages and other consumer loans, making them particularly vulnerable to the housing downturn.

Thrifts have been the most troubled regulated institutions during the financial crisis and among the most spectacular failures.

The costliest was last year's seizure of California lender IndyMac Bank, on which the bank insurance fund is estimated to have lost US$10.7 billion.

The Office of Thrift Supervision, a Treasury Department agency, said on Thursday that BankUnited FSB reported US$1.2 billion in losses last year as defaults on loans piled up. The thrift "was critically undercapitalized and in an unsafe condition to conduct business," the agency said.

BankUnited FSB is the 34th federally insured institution to be closed this year, and the biggest.

Florida's largest banking institution with about US$13 billion in assets as of May 2 was sold for US$900 million to an investor group led by former North Fork Bancorp Chairman and CEO John Kanas. It reopened as a newly chartered savings bank called BankUnited yesterday, with Kanas at the helm.

The investor group includes several prominent firms: the Blackstone Group, the Carlyle Group, Centerbridge Partners and WL Ross & Co, the private-equity firm run by billionaire Wilbur Ross.

The new bank will assume US$12.7 billion in assets and US$8.3 billion of its total US$8.6 billion in deposits.

In addition, the FDIC and the new bank entity agreed to share losses on about US$10.7 billion in assets.

Deposits will be insured by the FDIC, and customers can continue to use BankUnited FSB checks, ATM cards and debit cards, the FDIC said.

The 34 bank failures this year in the United States compare with 25 in 2008 and just three in 2007.


Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend