Report: BB&T will take over Colonial Bank in what may be biggest bank failure of year
Update, 2:30 pm: Sim Sippial, chairman of the board at Colonial BancGroup, the parent company of Colonial Bank, told the hometown newspaper in Montgomery, Ala., that he has seen broadcast reports on CNN and CNBC that say Colonial has been seized and sold to BB&T bank, but he declined to confirm the reports. Sippial told the Montgomery Advertiser that no official of any bank regulatory organization has told him the bank has been seized.
The comments (see below) that are attached to this blog posting suggest some Florida customers have had difficulty getting their money held in Colonial accounts.We cannot confirm this but are checking. It is typical for the FDIC to remain silent on any deal involving a troubled bank until the end of the business. day. We will update this situation later this afternoon.
Alabama's troubled Colonial Bank will be taken over today by North Carolina's BB&T, Bloomberg News is reporting, citing unnamed sources. Here's the full story. Neither the banks nor the FDIC have anything to say -- yet.
We've been calling this one for some time. It's just happening a lot faster than expected, and a whole lot quicker than the federal government and the FDIC would like. If Colonial fails, it falls into the hands of the FDIC before it is handed over in a quick sale to BB&T. The FDIC will most likely agree to take on some of Colonial's bad assets, providing BB&T an incentive to take over most of the remaining Colonial without inheriting the entire financial mess.
For the FDIC, however, it will mean taking a big hit to its bottom line. Colonial's failure would make it the biggest commercial bank this year -- in fact in many years. Colonial has close to $26 billion in assets. Nearly 200 of its branches are in Florida.
For customers, FDIC insurance should protect most depositors.
We'll update this throughout the day as we learn more.
-- Robert Trigaux, Times Business Columnist