US bank failures still occurring
(25 August 2009 – USA) While 2008 was marked by a number of high profile US bank failures and bailouts, 2009 has not been immune, with 81 US banks failing so far this year.
Guaranty Bank in Texas became the 81st bank in the US to fail this year after it was shut down by Federal regulators, which agreed to absorb loan losses, the Wall Street Journal has reported.
This failure and three others in one day bring the total number of bank failures this year to 81, the highest level since the end of the savings-and-loan crisis.
While Guaranty may not be a high profile bank worldwide, it represents the 10th largest bank failure in US history, with assets totalling US$13 billion.
The decision by the government comes as officials continue to close some of the larger troubled banks on their problem list.
As part of the decision, the government sold the operations to a local division of a foreign bank. The FDIC sold most of Guaranty's operations to BBVA Compass, the US division of Banco Bilbao Vizcaya Argentaria SA of Spain.
While assets are worth US$13 billion, BBVA Compass agreed to buy US$12 billion worth. The FDIC agreed to absorb potential losses on US$11bn in that portfolio.
The FDIC brokered loss-sharing deals with acquiring banks for each of the four most recent failed institutions, and the government has relied on such arrangements this year to incentivise healthy banks to take on riskier assets at failed competitors.
This failure and three others in one day bring the total number of bank failures this year to 81, the highest level since the end of the savings-and-loan crisis.
While Guaranty may not be a high profile bank worldwide, it represents the 10th largest bank failure in US history, with assets totalling US$13 billion.
The decision by the government comes as officials continue to close some of the larger troubled banks on their problem list.
As part of the decision, the government sold the operations to a local division of a foreign bank. The FDIC sold most of Guaranty's operations to BBVA Compass, the US division of Banco Bilbao Vizcaya Argentaria SA of Spain.
While assets are worth US$13 billion, BBVA Compass agreed to buy US$12 billion worth. The FDIC agreed to absorb potential losses on US$11bn in that portfolio.
The FDIC brokered loss-sharing deals with acquiring banks for each of the four most recent failed institutions, and the government has relied on such arrangements this year to incentivise healthy banks to take on riskier assets at failed competitors.
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