The economy is getting better, but people are still losing their jobs, and banks are still going bankrupt. At least we are told it’s getting better. They need someway to keep the engines running on Wall Street.

Although BankUnited is a regional player, it’s still somewhat of a larger bank, with nearly 14 billion in assets, and a large number of outlets. When a bank this size goes belly up, it brings some major concerns to the market. What’s different here is that private investors have stepped in riding a white horse to save the bank, after the last minute. It will be interesting to see how the investors position themselves as possible takeover targets come up. The investor group will inject an additional $ 900 million into the bank; bring its tangible common equity to 8% of assets.  

Breakdown: BankUnited

·          Worth nearly $13bn by assets

·          Closed by federal regulators in the biggest US bank failure of 2009

Breakdown: Investor Group

·          Blackstone Group

·          The Carlyle Group

·          Centerbridge Partners

·          WLRoss & Co

“The auction, conducted by the Federal Deposit Insurance Corporation, was the second of a troubled US bank during the credit crisis. Earlier, a group including JC Flowers, hedge fund manager John Paulson and Dune Capital won the bidding for IndyMac’s assets.”

Breakdown: The Deal

·          Deal includes a loss-sharing agreement on $10.7bn of the bank’s $12.8bn in assets

·          Government will take 80% of the first $4bn in losses

·          95% of any remaining losses

·          Federal government receives warrants, share of any future upside

·          Investors will put $900m of equity into the bank

·          Bringing tangible common equity up to 8% of assets

·          Giving the bank the ability to make acquisitions

·          Will be run by John Kanas, former chief executive of North Fork

·          Winning group has talked to regulators for almost four months

“Regulators have worried that sales of troubled banks to private capital should not look overly generous. Those fear were fed when Chris Flowers, founder of private equity firm JC Flowers, said the investor group that bought IndyMac’s assets had all the upside for the failed California bank, while the government had all the downside. Calls to Mr Flowers were not returned.”

Read Article: Private equity consortium wins BankUnited auction

FDIC: FDIC Bank Closing Information for BankUnited, FSB