Private equity comeback to alter U.S. bank landscape
NEW YORK (Reuters) - After a disastrous foray into banking early last year, private equity is making a cautious comeback with deals such as the BankUnited takeover, and their return will likely change how the industry looks.
Regulators appear to be working with private equity firms looking to buy banks, and in the next year or two several U.S. regional lenders could end up in the hands of buyout funds, banking analysts said.
"I can't picture a 5,000-branch bank coming out of this. But could I see 300-, 400-, 500-branch networks stitched together? I think so," said Seamus McMahon, chief executive of bank consulting firm McMahon Advisory LLC.
"Private equity firms are going to have a lot of influence."
As real estate markets continue to crater, many of the 8,300 U.S. banks will suffer, and some will fail.
Private equity funds, meanwhile, have roughly $1 trillion of untapped funds at their disposal.
Some buyout funds are dipping their toes in the water now.
Firms including Wilbur Ross's WL Ross & Co, Carlyle Group CYL.UL, Blackstone Group (BX.N) and Centerbridge Partners teamed up to take over Florida-based BankUnited in a government-assisted deal announced on Thursday.
The funds put in $900 million of their capital, and are receiving support in the deal from the government.
Earlier this year, private equity firm J.C. Flowers & Co got together with other investors to take over assets of failed mortgage lender IndyMac.
In December, MatlinPatterson Global Advisers LLC agreed to invest in Flagstar Bancorp Inc (FBC.N).
After winning the auction for BankUnited, the group led by former North Fork Bank head John Kanas intends to continue growing through further acquisitions that could be rolled into the new bank once it is fixed.
One of the targets could be BankAtlantic Bancorp Inc (BBX.N), a person familiar with the consortium said. The source is anonymous because the plans are not public.
BankAtlantic bristled at the suggestion it would ever be a target. "We would think that BankAtlantic would want to buy BankUnited, rather than the other way around," Chairman Alan Levan told Reuters.
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