FDIC to Provide Guidance on Private Equity Bank Investments

June 3, 2009

In a recent press release that a consortium of private equity buyout firms would take control of BankUnited FSB, the Federal Deposit Insurance Corporation (FDIC) said it would soon provide guidelines for future private equity investments in bank holding companies.

On May 22, 2009, the FDIC announced that BankUnited, a newly chartered federal savings bank, acquired the government-seized BankUnited Financial, the largest independent bank in Florida, in a transaction facilitated by the FDIC, and recapitalized it with $900 million in capital. The acquisition was led by John Kanas, the former CEO of North Fork Bancorp, and, unlike most deals for failed banks, a new bank holding company was formed and capitalized with backing from a consortium of private equity investors, including: W.L. Ross & Co. LLC; Carlyle Investment Management L.L.C.; Blackstone Capital Partners V L.P.; Centerbridge Capital Partners, L.P.; LeFrak Organization, Inc.; The Wellcome Trust of London; Greenaap Investments Ltd.; and East Rock Endowment Fund.

In connection with the transaction, the FDIC noted in its press release that due to the interest of private equity firms in the purchase of depository institutions in receivership, the FDIC has been evaluating the appropriate terms for such investments. In the near future, the FDIC will provide generally applicable policy guidance on eligibility and other terms and conditions for such investments to guide potential private equity investors.

The Private Equity group at McGuireWoods LLP is dedicated to keeping our clients advised of new legislative and business developments as they occur. If you have any questions regarding these issues, please feel free to contact your primary attorney at McGuireWoods LLP or the authors.