Fremont General given deadline to fix bank

NEW YORK (Reuters) - Fremont General Corp FMT.N said on Friday that U.S. banking regulators declared its banking unit undercapitalized and has required the company to raise money or find a buyer in two months.

Fremont, which earlier this month received default notices related to $3.15 billion of subprime mortgages and said its survival could be threatened if it were sued, said that on Wednesday the company received a directive from the U.S. Federal Deposit Insurance Corp (FDIC) requiring it to take corrective action by May 26.

Those actions may include selling shares or other obligations in order to recapitalize its banking unit Fremont Investment & Loan, divesting the bank, or accepting an offer to merge or be acquired.

Fremont, based in Brea, California, said that there is no assurance that it will be successful in its efforts to comply with the directive or otherwise address its capital needs.

About a month ago, Fremont hired Credit Suisse and Sandler O'Neill & Partners LP to explore options, including the sale of the company.

Fremont had been one of the 10 largest U.S. subprime mortgage lenders until regulators, including the FDIC, ordered it to stop risky lending last March.

(Reporting by Chris Reiter, editing by Dave Zimmerman)