Florida's Largest Bank About To To Be Seized By Regulators?

This could be the largest bank failure since IndyBank last year and may wipe out much of the FDIC's remaining capital, stay tuned.-Lou

BankUnited Bidders Said to Be Told Bank to Be Seized

May 19 (Bloomberg) -- Bidders for BankUnited Financial Corp., the ailing Florida bank, were told by U.S. officials that regulators plan to put the lender into receivership before selling its assets, according to people familiar with the auction.

WL Ross & Co. and private-equity firms including Carlyle Group and Blackstone Group LP submitted a bid today to buy BankUnited Financial Corp. assets, according to people with knowledge of the offer, who declined to be identified because the talks are confidential. Goldman Sachs Group Inc. and Toronto-Dominion Bank also made a joint bid, Dow Jones Newswires reported, citing unidentified people.

Blackstone and Carlyle, the world’s two biggest leveraged buyout firms, are among those eager to snap up banks on the cheap after global losses from the credit crisis topped $1.4 trillion. BankUnited, with about $14 billion in assets, lost money for three straight quarters amid surging defaults on option adjustable-rate mortgages. Regulators earlier this year declared the Coral Gables-based company “critically undercapitalized” and ordered it to find a buyer.

“The FDIC will try to line up buyers before taking over a lender,” said Patricia McCoy, who teaches banking and securities regulation at the University of Connecticut School of Law in Hartford, referring to the Federal Deposit Insurance Corp. “In receivership, the operating assumption is that the common equity will be reduced to zero.”

Shareholders at Risk?

Federal regulators may take BankUnited into receivership as early as this week, the people said, a step that could wipe out shareholders. The group with the winning offer may then take over the lender, Florida’s largest, from the government.

The FDIC has been named the receiver for 33 banks that have failed this year, and found buyers for all but five. In the case of BankUnited, whose primary regulator is the Office of Thrift Supervision, the OTS would be responsible for closing the bank and placing it in receivership, while the FDIC would be responsible for the sale.

BankUnited spokeswoman Melissa Gracey didn’t return a call or an e-mail. Representatives for the private-equity firms, Goldman Sachs and Toronto-Dominion declined to comment.

“We don’t comment on open and operating institutions,” said FDIC spokesman David Barr. OTS spokesman Bill Ruberry declined to comment.

BankUnited fell 21 percent to 70 cents in Nasdaq Stock Market trading at 4:10 p.m. The stock traded as high as $32.95 in December 2004