BankUnited seized by regulators in biggest bank failure of 2009

Regulators this afternoon seized BankUnited (BKUNA), Florida's largest bank, and sold its deposits to a consortium of private equity funds, marking it the largest bank to fail so far this year.

BankUnited's failure will cost the Federal Deposit Insurance Corp. some $4.9 billion, the agency said in a statement. The bank boasted $12.8 billion in assets and $8.6 billion in deposits, according to the FDIC.
BankUnited had been deemed "critically undercapitalized" by regulators and ordered to find a buyer. Bidding to take over the institution reportedly attracted big banks like TD Bank (TD) and Goldman Sachs (GS) as well as private equity investors including the Carlyle Group, the Blackstone Group (BX) and WL Ross & Co.

In the end, the group of private equity investors won out. Former North Fork Bank CEO John Kanas will lead the management team at the new bank, which will also be called BankUnited.

In a move apparently intended to sweeten the deal for the consortium of private equity investors, the FDIC agreed to share any losses on $10.7 billion of BankUnited's assets. The investors promised to plow $900 million into the company to recapitalize it.

It's unusual -- and tricky, from a legal standpoint -- for private equity investors to buy banks. But the FDIC said it would craft guidelines to govern such deals, potentially signaling a greater openness from regulators to allow them to make such purchases.

BankUnited's failure was the biggest since Washington Mutual was closed by the Office of Thrift Supervision last September and sold to JPMorgan Chase (JPM).
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