More to the Banking saga | PE enters fray


U.S. regulators are drawing up rules that would make it easier for private equity firms to acquire troubled banks, aiming to free up more funds to recapitalize lenders, the Financial Times reported, citing people close to the situation.

The plan, which has yet to be finalized, may require private equity companies to inject substantial capital into lenders and to agree not to sell them for at least two years, the newspaper reported.

Obama administration officials continue to stress concerns about ensuring sufficient capital in the financial system, even as several financial institutions have begun lining up to return funds borrowed under the governments $700 billion troubled asset relief program to cope with the financial crisis.

The paper cited analyst estimates that private equity firms could provide up to $50 billion to recapitalize banks.

The Federal Deposit Insurance Corporation, which is charged with taking over failed lenders, is leading the drafting of the new rules, the paper quoted people familiar with the situation as saying.

The FDIC board, which also includes representatives from other banking regulators, is expected to discuss the matter in the next few weeks, it said.

Buy-out funds wanting to buy a troubled bank would have to disclose performance measures and marketing materials to allay fears that they might use the banks to subsidize other companies in their portfolio, it added.

The Federal Reserve has limited private equity groups to bank stakes of less than 25 per cent, reflecting concerns over conflicts of interests, but the latest crisis has prompted regulators to take a softer stance, the paper said.

via U.S. drafting rules to spur PE bank buyouts: report | Reuters .

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About zyakaira

Investment Banker, 40s, Bangalore This Biopic and this web recreates how one point of view, one person can impact a tremendous economic engine that the world thrives and mis-thrives on. This one has the knowledge and the civil sense , the art of conversation and some good writing to mentor others as powerful and help global managers develop and fine tune their approach on US markets, China, India and the world. Read on here, and let me know what you need. It can be a race for TRPs, a race for new markets and a race to do what is right. I have the pulse of the crisis, the recovery and the market direction and can help you build and refine your strategy as i have helped thousands of managers and multiple global corporations. Of course, it’s more fun if you talk to me. I am in favor of leading this moving of the economic crisis and will partner with you in a soft and subtle way, just the way we both ride to the top. But you can write with us, opine and just reply with aplomb and shine on Twitter , 4 square , Facebook and any other social “choupal” of choice via zyaadakairaada Profile & Portfolio - SocialPicks Different flavours at: http://benchilibowl.wordpress.com http://zyaada.mp

Posted on June 13, 2009, in Bank Stocks, Financial Markets, Investments, Obamanomics, TARP, US and tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. Leave a comment.

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