Tuesday, May 26, 2009

Private Equity Method of Bank Acquisitions Disclosed?

There has been much speculation over whether the Office of Thrift Supervision's willingness to allow non-banks to acquire banks may be a signal that the Federal Reserve regs requiring only registered banks from taking a large position in banks may be thrown out in the not too distant future.

OTS approved the leveraged buyout firm, MatlinPatterson Global Advisers LLC’s purchase of Flagstar Bancorp Inc. in Troy, Michigan, and may allow similar takeovers.

The Fed has told private-equity companies it won’t permit a firm that isn’t regulated as a bank to own a majority stake in a bank.

Now comes word that a third regulatory body, the FDIC, may issue guidelines on private equity acquisitions. Writes Dealbook:

Private equity firms looking for bargains amid the nation’s ailing banks got some encouraging news Thursday when the Federal Deposit Insurance Corporation announced that has agreed to allow a consortium of buyout shops, including WL Ross, the Blackstone Group and the Carlyle Group, buy the failed lender, BankUnited Financial... the F.D.I.C., which is expected to face further bank failures in the coming months, indicated that it might soon release policy guidelines for potential private equity investors seeking to buy failed banks.

“Due to the interest of private-equity firms in the purchase of depository institutions in receivership, the FDIC has been evaluating the appropriate terms for such investments,” the agency said Thursday. It added it would be giving guidance on eligibility and other conditions for private-equity investors in the near future.
It took them awhile but PE appears to have figured out its preferred mode of entry, through approval of the FDIC. Now, on to the spoils!

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