As Colonial Bank lags, can Ayn Rand-inspired BB&T be waiting to buy?
What might be the fate of Alabama's struggling Colonial Bancgroup, parent of Colonial Bank with nearly 200 branches across Florida and some two dozen offices about the Tampa Bay area? Time may be short for action, though Colonial shares closed Monday at 53 cents, up four pennies. It leaves Colonial interim CEO Lewis Beville between a rock and a hard place. (Beville photo courtesy of Colonial.)
If Colonial fails, it will be the fifth largest bank failure in U.S. history.
In a bizarre action on Aug. 7, Colonial announced that the Alabama State Banking Department has given Colonial notice that it will meet on Aug. 12, to ask Colonial to consent to appoint the Federal Deposit Insurance Corp. as receiver or conservator of the company if and when the regulators deem such appointment necessary. Traditionally, the FDIC never shows it cards in advance, much less has state regulators ask a troubled bank for "consent" to hand it over to the feds.
Barron's reports that North Carolina's BB&T -- which recently began crowing its initials stand for "Best Bank in Town" -- might make a good buyer. Citing the analysis of Fox Pitt Kelton, BB&T is relatively healthy and may view the addition of Colonial into the BB&T fold as an opportunity too good to ignore. Says Fox Pitt Kelton:
"We assume that BB&T would be interested in acquiring Colonial if it is taken over by the FDIC and BB&T receives an adequate loss-sharing agreement."
What that means is that BB&T would wait for the feds to "fail" colonial and name the FDIC as receiver. Then a bank like BB&T would buy the remaining institution -- stripped of its worst assets -- for a modest sum.
We'll see what happens. BB&T's gotten a bit strange lately with a flurry of news reports focusing on BB&T former CEO (now bank chairman) John Allison's (shown with red tie in AP photo) philosophical tendencies.
In BB&T's hometown of Winston-Salem, the local Journal newspaper has long written about Allison's fascination with pro-capitalism thinker Ayn Rand. The late novelist's book Atlas Shrugged is eerily prescient, the Journal notes, with its depiction of a government takeover of private industry. This month, the New York Times explored the same ground with Allison.
Quite a back story if a BB&T-Colonial deal emerges. Who is John Allison?
-- Robert Trigaux, Times Business Columnist