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BANK SALE:
How the FDIC finds buyers for troubled banks
1. A banker interested in buying troubled institutions contacts the Federal Deposit Insurance Corp. and specifies the geographic areas where it would consider an acquisition.
2. The banker is given access to a secure FDIC website with a list of banks likely to be shut down, and dates by which bids must be submitted.
3. The banker considering one of the trouble banks on the list sends an e-mail to the FDIC formally declaring its intent to bid, and signs a confidentiality statement.
4. The banker now has access to additional financial information about the failed bank, including loan and deposit data.
5. If approved by the FDIC, the banker can perform due diligence of the troubled bank (no customer or employee names are revealed) at a location chosen and monitored by the FDIC.
6. The banker may submit a bid for all or part of the troubled bank. Typically, the amount offered is a percentage of the deposits. The bidding process is confidential and is not an auction, so the banker cannot alter an offer based on competing bids.
7. The FDIC selects the bid that will be least costly to its insurance fund.
8. Days later, the troubled bank is closed and the FDIC is named receiver. The FDIC then sells the bank to the winning bidder -- typically on the same day to minimize disruption.
9. The troubled bank usually opens the next day under its new name.
CHRIS SERRES
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