Private firms to buy out Indymac Bancorp- 12-30-2008
Tuesday December 30 2008
IndyMac Bancorp, which failed in July after a run on its deposits, is to be sold by the US government to private equity and hedge fund firms, according to US reports.
The buyers are JC Flowers & Co and Dune Capital Management, New York-based private equity firms, and the hedge- fund firm Paulson.
The sale by the Federal Deposit Insurance Corporation (FDIC) would be among the first involving an unregulated firm buying a bank-holding company.
The group would buy all of Pasadena, California-based IndyMac, including 33 branches, its reverse-mortgage unit and a $176bn loan-servicing portfolio.
"We have not made an announcement on a buyer outside of saying that we expect to make one by year's end," FDIC spokesman David Barr said in an email yesterday.
The FDIC seized the lender in July and had managed a successor called IndyMac Federal Bank FSB while seeking a buyer.
Unpaid mortgages left the lender short of cash, triggering a run on deposits that drained $1.3bn in 11 days, ending with the US seizure on July 11. The bank was among 25 to collapse this year amid losses from mortgages.
IndyMac's failure will cost the FDIC's deposit insurance fund about $8.9bn, the agency has said.
FDIC in November made it easier for investors, including private equity and hedge funds, to bid for deposits and assets of failing lenders.
JC Flowers had raised $2.5bn this year for a buyout fund that targets banks and other financial firms. In August, J Christopher Flowers, the firm's founder, won approval to buy First National Bank of Cainesville in rural Missouri. (Bloomberg)
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