FDIC to halt sale of Atlanta bank

NEW YORK (Reuters) - The Federal Deposit Insurance Corp on Friday aborted efforts to sell Silverton Bank, a failed Atlanta institution seized by regulators last month, choosing instead to liquidate amid worries the bank was losing customers too rapidly to allow a full-blown auction.

The U.S. bank regulator, charged with protecting depositors, took over Silverton on May 1 and created a "bridge" bank that kept the institution running while they solicited buyers. The FDIC on Friday said "pre-resolution" sales efforts had not resulted in any interest in Silverton.

"Prior to the FDIC's appointment as receiver, Silverton had initiated a marketing effort which was allowed to continue until a whole-bank acquisition was no longer feasible," FDIC spokesman David Barr said in an e-mailed statement.

The FDIC now plans to sell off the bank in parts. "We will ensure that sufficient time is given to smoothly transition correspondent banking services to other providers," Barr said.

Yet there was interest from at least two groups of bidders, people familiar with the situation said.

One consortium, including private equity firms Carlyle Group, Lightyear Capital, Harvest Partners and Colony Capital, had been in talks to acquire the bank for at least two weeks, people familiar with the situation told Reuters.

Washington-based Carlyle, one of the world's largest private investment firms, was part of a group that last month agreed to buy Florida's BankUnited from the FDIC.

Lightyear, led by brokerage industry veteran Donald Marron, was part of another group that last week agreed to invest $800 million into First Southern Bancorp, a healthy Florida community bank.

About two days ago, a second group of investors threw their hat in the ring. The FDIC concluded it needed more time to conduct a full auction, but Silverton was wasting away, the sources said.

The FDIC spokesman declined to further comment on Silverton.

Silverton provided processing and clearing services to other banks, rather than selling banking products direct to consumers. It had about $4.1 billion in assets and $3.3 billion in deposits, but anxious customers were fleeing.

The FDIC, charged with seizing failed banks to protect depositors, has been working overtime as the recession and breakdown in financial markets push dozens of banks over the brink.

But some of these FDIC brokered deals have drawn fire, including the sale this year of $16 billion IndyMac to a consortium including Dune Capital, JC Flowers & Co, Paulson & Co and Stone Point Capital.

Lawmakers have also raised questions about how competitive was bidding in last month's deal for BankUnited, a distressed $13 billion thrift, in which WL Ross & Co, Carlyle, Blackstone Group and Centerbridge Partners injected $900 million.

(Reporting by Joe Giannone and Paritosh Bansal, editing by Dave Zimmerman, Lisa Von Ahn, Richard Chang)