A major Florida bank is on the brink of collapse and must either raise new capital or close, federal regulators said.
BankUnited Financial Corp., based in Coral Gables, is severely undercapitalized, the Office of Thrift Supervision said in an enforcement letter last week. It told the bank, which has $14 billion in assets, to either sell its holdings, merge with another bank, or face federal receivership.
In a Securities and Exchange Commission filing prompted by the enforcement action, BankUnited reported an equity deficit of $13 million. It said its Tier 1 capital, the standard measurement of a bank's financial health, had declined to negative 0.2 percent. Last September, federal regulators sent the bank a cease-and-desist order demanding that it maintain a minimum level of 7 percent.
The bank said in its SEC filing that it would try to comply but was not certain whether it could reach a deal. Under the terms set out by OTS, the bank has only 15 days to do so.
"We continue negotiations with various parties to raise capital and restructure our balance sheet, but we cannot assure you that in the current financial environment these negotiations will be successful and will result in a capital infusion prior to any potential actions that bank regulators might take," the bank said.
BankUnited is the largest institution of its kind in Florida, with 86 branches. Its troubles stem in large part to overexposure to the housing market. The state has been the scene in the last two years of some of the most significant real estate losses in the country.
The bank has also found itself in the middle of a controversy related to the former director of OTS, Scott M. Polakoff. The Treasury Department's inspector general is currently investigating whether Mr. Polakoff improperly permitted BankUnited in August to overstate its capital levels.
Treasury removed Mr. Polakoff from his position in late March and replaced him with his deputy, John E. Bowman.
Although OTS has shut down a number of small community banks in recent months, BankUnited is the first large financial institution since last year to face the serious possibility of federal receivership.
The Office of Thrift Supervision sent a cease and desist letter last week to the First Bank of Idaho, demanding that it too improve capital levels by either merging with another bank or selling itself.
All told, at least 25 banks have closed so far this year, the same number as in all of 2008.
BankUnited Financial Corp., based in Coral Gables, is severely undercapitalized, the Office of Thrift Supervision said in an enforcement letter last week. It told the bank, which has $14 billion in assets, to either sell its holdings, merge with another bank, or face federal receivership.
In a Securities and Exchange Commission filing prompted by the enforcement action, BankUnited reported an equity deficit of $13 million. It said its Tier 1 capital, the standard measurement of a bank's financial health, had declined to negative 0.2 percent. Last September, federal regulators sent the bank a cease-and-desist order demanding that it maintain a minimum level of 7 percent.
The bank said in its SEC filing that it would try to comply but was not certain whether it could reach a deal. Under the terms set out by OTS, the bank has only 15 days to do so.
"We continue negotiations with various parties to raise capital and restructure our balance sheet, but we cannot assure you that in the current financial environment these negotiations will be successful and will result in a capital infusion prior to any potential actions that bank regulators might take," the bank said.
BankUnited is the largest institution of its kind in Florida, with 86 branches. Its troubles stem in large part to overexposure to the housing market. The state has been the scene in the last two years of some of the most significant real estate losses in the country.
The bank has also found itself in the middle of a controversy related to the former director of OTS, Scott M. Polakoff. The Treasury Department's inspector general is currently investigating whether Mr. Polakoff improperly permitted BankUnited in August to overstate its capital levels.
Treasury removed Mr. Polakoff from his position in late March and replaced him with his deputy, John E. Bowman.
Although OTS has shut down a number of small community banks in recent months, BankUnited is the first large financial institution since last year to face the serious possibility of federal receivership.
The Office of Thrift Supervision sent a cease and desist letter last week to the First Bank of Idaho, demanding that it too improve capital levels by either merging with another bank or selling itself.
All told, at least 25 banks have closed so far this year, the same number as in all of 2008.
published April 20, 2009, 0 Comments
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