Cleary advises on billion-dollar takeover of stricken US bank
Cleary Gottlieb Steen & Hamilton has taken the lead role on financial services company BBVA Compass's acquisition of Guaranty Financial Group, a Texas-based bank teetering on the edge of bankruptcy. Last Friday (21 August) the Federal Deposit Insurance Corporation (FDIC) took possession of Guaranty, before turning it over to BBVA, which gained $12bn (£7.3bn) in assets and $11.5bn (£7bn) in liabilities.
August 25, 2009 at 06:34 AM
2 minute read
Cleary Gottlieb Steen & Hamilton has taken the lead role on financial services company BBVA Compass's acquisition of Guaranty Financial Group, a Texas-based bank teetering on the edge of bankruptcy.
Last Friday (21 August) the Federal Deposit Insurance Corporation (FDIC) took possession of Guaranty, before turning it over to BBVA, which gained $12bn (£7.3bn) in assets and $11.5bn (£7bn) in liabilities.
The Cleary team advising BBVA was led by partners Jack Murphy, Derek Bush and Paul Marquardt.
BBVA adds Guaranty's 164 bank branches in Texas and California to the 600 branches it already owns thoughout the US, making it the country's fifteenth largest commercial bank.
Because Guaranty was nearly bankrupt, the FDIC offered to cover 80% of the first $2.3bn (£1.4bn) of losses BBVA acquired in the deal, and 95% of the losses after that threshold.
Not included in the deal were $344m (£210m) worth of Guaranty's brokered deposits, which the FDIC will refund directly. With that cost, along with the losses it is covering for BBVA, the FDIC estimates it will pay out a total of $3bn (£1.8bn) in taxpayer dollars. Still, the government agency maintains it was the least expensive option.
Guaranty is the eighty-first US bank to fail this year, and the second headquartered in Texas, according to the FDIC. In a press release, BBVA said it expects to integrate Guaranty's banking operations by next year.
This article first appeared on The Am Law Daily blog on americanlawyer.com.
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