Feb 26 (Reuters) - A group of ex- regulators and bankers, led by William Isaac, the Federal Deposit Insurance Corp’s former chairman, are planning to raise $1 billion to buy failed lenders in the U.S. southeast, Bloomberg said, citing people with knowledge of the plan.
Isaac will chair the investment group, which has been named BSE Management LLC, while David Moffett, who stepped down as chief executive of Freddie Mac FRE.N last year, and former Office of Thrift Supervision regional director John Ryan will help run BSE, the agency said.
The investment group plans to raise $500 million initially, Bloomberg reported.
BSE’s strategy is to build a regional bank by making acquisitions and then selling it in five to seven years. It seeks an internal rate of return of atleast 25 percent, the agency added.
BSE Management is a bank opportunity PE fund and a bank holding company that is buying out bankrupted U.S. mid- and small-sized banks from the FDIC, Hui Chen, the fund’s China representative mentioned in his LinkedIn.com profile.
The fund is focusing on the southeast regional states -- such as Florida -- that are considered desirable over the long term as Americans retire and move to warmer climates.
Isaac was FDIC chairman from 1981 to 1985. He is now chairman of LECG Global Financial Services, Bloomberg said.
BSE’s working group includes Ray Christman, former CEO of the Federal Home Loan Bank of Atlanta and chairman of the Federal Home Loan Bank of Pittsburgh, and Brendan MacMillan, previously a partner at investment firm Oceanwood Capital Management, the agency said citing offering documents dated last May.
The number of “problem” U.S. banks jumped 27 percent during the fourth quarter of 2009 to 702, the highest level since 1993 and a sign that the industry’s recovery remains uneven, regulators reported on Tuesday. [ID:nN23103175]
Regulators have closed 20 U.S. banks so far this year and 185 since January 2008, as banks continue to struggle with loan portfolios stocked with souring loans.
Isaac could not be immediately reached for comments by Reuters outside regular business hours. (Reporting by Archana Shankar in Bangalore; Editing by Lincoln Feast)
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