FDIC bails out one more bank to take tally to 34 this year

22 May 2009

In the largest US bank failure this year, the Federal Deposit Insurance Corporation (FDIC) has sold the assets of Bank United Financial Corp of Coral Gables, Florida, to private-equity firms that include WL Ross & Co. LLC; Carlyle Investment Management L.L.C.; Blackstone Capital Partners V L.P.; Centerbridge Capital Partners, L.P. LeFrak Organization, Inc; The Wellcome Trust; Greenaap Investments Ltd.; and East Rock Endowment Fund.

As a result of this transaction, BankUnited, FSB, offices and branches will be operated as BankUnited offices and branches.

BankUnited, FSB is the 34th FDIC-insured institution to fail in the nation this year, and the third in Florida.

The last bank to be closed in the state was Riverside Bank of the Gulf Coast, Cape Coral on February 13, 2009.

BankUnited will recapitalise the institution with $900 million in new capital.

Bank United, FSB had assets of $12.80 billion and deposits of $8.6 billion as on 2 May, 2009. The new BankUnited will assume $12.7 billion in assets and $8.3 billion in nonbrokered deposits.

The FDIC and BankUnited entered into a loss-share transaction and will share in the losses on approximately $10.7 billion in assets covered under the agreement. The loss-sharing arrangement is projected to maximize returns on the covered assets by keeping them in the private sector.

The agreement also is expected to minimise disruptions for loan customers as they will maintain a banking relationship.