Home -> Law Blog Directory -> Bailout Blogs -> Calculated Risk

Bailout

: Calculated Risk

Bank Failures and Puerto Rico

By Anonymous

It appears the FDIC is getting closer to taking action in Puerto Rico.

Back in February, José Carmona and John Marino at caribbeanbusinesspr.com wrote: Feds expected to take action against island banks next month and last month from Dow Jones: FDIC Seeks Buyers for Three Puerto Rican Banks

Joe Adler explains some of the complications in Puerto Rico writing in American Banker: Puerto Rico Forces FDIC to Scramble

Three banks on the island holding more than $20 billion of assets are in trouble ... The banks ? $12 billion-asset Westernbank Puerto Rico, $6 billion-asset R-G Premier Bank of Puerto Rico and $2.6 billion-asset Eurobank ? account for nearly a quarter of the assets on the island ...

Many observers said the FDIC cannot afford to deal with each failure individually. ... if the FDIC needs to resolve all three institutions at the same time, it may face a shortage of buyers. ...

Moreover, the large mainland banking companies ... have all but abandoned Puerto Rico. ... "There hasn't been a lot of interest from banks who aren't already in Puerto Rico," said Joe Gladue, an analyst with B. Riley & Co. Inc.

It appears the remaining healthy banks in Puerto Rico don't have the capacity to acquire these troubled banks - and most banks not in Puerto Rico just aren't interested.

Full post as published by Calculated Risk on April 09, 2010 (boomark / email).