Foreign Firms Acquire Failed US Banks

Any additional capital that will help cushion the recession blow to Federal Deposit Insurance Corporation would definitely be welcome. Other foreign banks interested in taking over failing US banks have presence in the US. These include El Centro California, subsidiary of Rabobank group, Netherlands; Toronto-Dominion Bank, through its subsidiary in Portland, Maine; and French bank BNP Paribas, through Band of the West, its San Francisco subsidiary. Since there are already 106 US bank failures for the past two years, these have depleted the insurance fund of FDIC.

A BMO Capital Markets bank analyst, Peter Winter, said “so far, foreign banks are good corporate citizens.” A buyer should have the staff to handle the branches of the failed bank over the weekend. Therefore, lawyers and investment bankers said that having a US presence is very critical. Freedman & Taff LLP’s head of acquisition practice and mergers with Silver (law firm), Barry Taff, said, “Bank regulators and FDIC would be uncomfortable to hand over failed banks to companies with no US regulatory history.

BBVA won Guaranty Bank against competition from private-equity firms such as Oak Hill Capital Partners, Carlyle Group, Blackstone Group, US Bancorp, and Gerald J. Ford, billionaire and former bank chief executive. The most important consideration of FDIC is to limit insurance fund cost, which covers losses coming from troubled loans of failed banks.