Sunday, 28 August 2016
Last updated 1 day ago
Apr 9 2009 | 1:48am ET
New York plans to make it easier for private equity firms to buy banks by offering pre-approved charters to prospective bidders in Federal Deposit Insurance Corp. auctions.
The state legislature is considering a bill that would give the New York State Banking Dept. the power to give firms more time to set up (or buy) a bank after being granted a charter, Reuters reports. If the proposal becomes law, New York would become the only state offering so-called “shelf charters;” currently, only the federal Office of the Comptroller of the Currency can grant such charters, which remain inactive until the holder is actually ready to buy a bank.
New York’s move could greatly expand the number of firms in a position to bid on weak or faild banks, which are expected to explode in numbers this year.
“There are many private equity firms that would like to bid in FDIC auctions for either whole banks or parts of banks, Marjorie Gross, the state’s deputy superintendent of banks and genera counsel, told Reuters.
A New York shelf-charter would give a firm the ability to bid on banks outside of the state, as well as those based there. Gross said the department hopes the bill can be passed by the end of the current legislative session, which ends in June.
“This would mean that New York was on a level playing field with the Comptroller of the Currency,” she said. “So that organizers did not feel they had to get a national bank charter in order to bid on assets.”