Another Sellout to Foreigner - Spanish bank acquires Guaranty bank

BBVA, the Spanish bank, on Friday succeeded in its acquisition of Guaranty Financial, a struggling Texas bank with $13.5bn in assets, the Federal Deposit Insurance Corporation said.

The move makes Guaranty the 81st US bank to fail this year. BBVA agreed to buy $12bn of Guaranty’s assets, with the FDIC retaining the remaining $1.5bn. Spain’s second biggest bank will also assume Guaranty’s $12bn in deposits.


“BBVA Compass’s acquisition of all the deposits was the ‘least costly’ resolution for the FDIC’s deposit insurance fund compared to alternatives,” the FDIC said in a statement.

The Office of Thrift Supervision said on Friday that Guaranty bank was, “in an unsafe and unsound condition because of the deteriorating quality of its loan portfolio, critically deficient earnings, capital insolvency and strained liquidity position”.

The latest bank failure will cost the FDIC $3bn in insurance funds. Through the agreement, the FDIC and BBVA will share in the losses of a, $11bn pool of Guaranty’s assets.

People close to the matter said previously that Toronto Dominion and JPMorgan had also expressed interest in Guaranty, which garnered interest from other regional banks due to its presence in Texas. US Bancorp, the Minneapolis-based parent of US Bank, which has $266bn in assets, had been considered by people involved in the auction to be one of the other strong candidates.

BBVA had reason to be aggressive in attempting to buy banking assets in the southern US. The Spanish bank bought Compass Bancshares, which is based in Alabama, in 2007 for nearly $9.6bn and has since sought to expand its presence.

“Right now, it’s banking as usual,” Manolo Sánchez, BBVA Compass’ chief executive, told Guaranty customers on its website.

Guaranty had 103 branches in Texas and 59 in California. BBVA has 750 branches across seven states in the US and now has 421 in Texas.

Three smaller US banks also failed on Friday. Regulators shuttered Atlanta’s ebank; First Coweta, of Newman, Georgia; and CapitalSouth Bank in Alabama.

Guaranty’s fate has become intertwined in recent weeks with that of Colonial Bank, an Alabama-based bank that was forcibly closed last Friday and largely sold to BB&T, another regional bank, in an FDIC-backed deal.