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Venture

Robert Trigaux

Report: Feds take pass on weak BankUnited

13

February

In the language of banking, is the largest bank based in Florida -- BankUnited, based in Coral Gables with $14.3 billion in assets, and operating in the Tampa Bay market -- TTTF? That's shorthand for Too Tiny To Fix and should not be confused with TBTF: Too Big To Fail.

Huh? What I'm trying to say is BankUnited is not big enough, should it fail, to disturb the greater financial system. Banks like Citigroup, BofA and JPMorgan Chase are TBTF so, perversely, they get all the attention of the feds to make sure they survive.

The Dow Jones wire carries a story (subscription required) this morning that says BankUnited's future is in jeopardy because the U.S. government has declined to prop up a private bid for the banking company. The tale highlights the strong hand being played by regulators in picking winners and losers during this banking crisis.

There's been chatter for weeks that investors W.L. Ross & Co. and Carlyle Group are interested in a joint purchase of BankUnited, but they want the U.S. government to share losses on BankUnited's $9.5-billion portfolio of troubled mortgages, a major contributor to the company's net loss of $306 million during the first quarter of fiscal 2009 ended Dec. 31, 2008.

I've blogged about BankUnited before. It's been struggling for a long time. To attract new money, BankUnited's been running ads in the Tampa Bay newspapers, including the St. Petersburg Times, offering higher-than average rates on its certificates of deposits (CDs). A year ago, its stock traded over $6 a share. Now it's just 22 cents.

Both Ross and Carlyle have expressed interest in buying distressed financial companies and recently were joined in their effort by hedge-fund manager John Paulson.

The story appears on the heels of others this week saying BankUnited expected to report a first-quarter loss of about $306 million and raised substantial doubt about its ability to survive.

Wilburrossbloomberg_2 W.L. Ross's Wilbur L. Ross (in photo from Bloomberg News) is the investor who made billions turning around distressed steel and textile companies. Last month he said he will buy a majority stake in a rural Florida bank in Indiantown called First Bank and Trust Co. The deal gives him a platform to purchase more banking assets. Ross has a pattern of acquiring one company in a struggling industry and augmenting it by buying similar firms.

--Robert Trigaux, Times Business Columnist

[Last modified: Tuesday, June 1, 2010 12:24pm]

    

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