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 The Federal Deposit Insurance Corp.'s seizure and sale of BankUnited Financial Corp. (NASDAQ:BKUNA) will likely be one of many and could also be a sign that regulators' unease about private equity firms buying banks could change soon. The FDIC sold the bank's assets to a consortium of private equity firms including WL Ross & Co., Blackstone Group LP (NYSE:BX), Carlyle Investment Management, Centerbridge Capital Partners LP, LeFrak Organization Inc., the Wellcome Trust, Greenaap Investments Ltd. and East Rock Endowment Fund, as well as bank leader John Kanas. This is the 34th U.S. bank failure in 2009 and the second-largest bank failure since the recession began in December 2007 -- the largest was the seizure of IndyMac last July. In the press release on its site, the FDIC said it expected to take a $4.9 billion loss on the transaction. BankUnited had $12.8 billion in assets and $8.6 billion in retail deposits. (The Deal Pipeline subscribers can read a full story for more details.) The FDIC and the buyers will share in the losses on approximately $10.7 billion in assets covered under the agreement and will be recapitalizing the institution with $900 million. Because of federal regulations on private equity ownership limits, no participant in the consortium will own more than 25% of the bank. What's key in the transaction is that regulators agreed to protect the private equity firms against most losses on the bank's troubled loans. "We're assuming that things will get a lot worse and that's why there was the need for the $4.9 billion from the FDIC on top of our $900 million," Wilbur Ross told CNBC's "Squawk Box." It's the first bank investment for Blackstone, and likely not the last as hundreds of regional and small banks are expected to fail this year. The Fed's ownership restriction limits on banks has been debated as more banks try to find investors and private equity firms seeking "safe and profitable investments." Although PE firms such as Carlyle and Blackstone have been eager to invest in banks, the resistance from federal regulators has put a damper on investments from PE. The Office of Thrift Supervision may be able to offer private equity firms that loophole they are looking for, as a Bloomberg report pointed out earlier this week. The OTS allowed MatlinPatterson Global Advisers LLC to purchase a controlling interest in Flagstar Bancorp in December 2008. Grovetta Gardineer, the agency's managing director for corporate and international activities, told Bloomberg, "The OTS is open to more acquisitions, like the Flagstar takeover announced in December." Several other banks are on the brink of collapse similar to IndyMac's and BankUnited's failures and may be auctioned off in a similar way as the government looks for ways to recapitalize the nation's banks. For a list of those banks, check out Which banks will fail next? - Maria Woehr Also see: Toronto-Dominion bidding for BankUnited BankUnited auction a test for PE BankUnited likely low-balled 2009 bank failures not including BankUnited:
2008 bank failures: 1. Sanderson State Bank, Sanderson, Texas December 12, 2008
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