Federal Deposit Insurance Corporation is planning to seek stakes in the firms bidding for closed banks, after pocketing $23.3m from New York Community Bancorp, when the lender acquired assets of Cleveland-based AmTrust Bank, reported Bloomberg.
James Wigand, deputy director of resolutions and receiverships at FDIC, said that an increase in the stock of the buyer after takeover would allow the agency to share profits.
In a telephone interview to the news agency, Mr Wigand said:“The market has been evolving to the point where these types of structures make more sense. But it won’t work for every transaction.”
The stakes can be in the form of stock units or warrants in the acquiring firm. However, the strategy can not be deployed if the buyer is an overseas firm or if it is not publicly traded.
Bank failures are on the rise this year, as battered commercial-real estate loans and mortgage defaults hurt US lenders. Recently, FDIC said that it would increase its budget 56% to $4bn for next year and increase staff 23% to 8,653 to manage bank closings, reported the news agency.
