Failed banks Wednesday edition - BBVA Said to Win FDIC Bidding for Guaranty Financial

By David Mildenberg and Jonathan Keehner

Aug. 20 (Bloomberg) -- Banco Bilbao Vizcaya Argentaria SA won the bidding to take over ailing Texas lender Guaranty Financial Group Inc., people familiar with the matter said, becoming the second Spanish bank to buy a U.S. lender this year.

The acquisition, arranged by the Federal Deposit Insurance Corp., follows the $1.9 billion purchase by Spain’s Banco Santander SA of Philadelphia-based Sovereign Bancorp Inc. in January. BB&T Inc. last week acquired Alabama’s Colonial BancGroup Inc. in a deal also brokered by the FDIC.

The purchase shows “those companies didn’t make serious acquisition errors years ago,” Gary Townsend, president of Hill-Townsend Capital LLC in Chevy Chase, Maryland, and a former bank analyst, said yesterday. “As in the case of BB&T buying Colonial BancGroup, it gives BBVA the opportunity to expand on the cheap.”

Guaranty said last month that it was unable to raise capital as demanded by regulators and will probably fail. The Office of Thrift Supervision has taken over board functions, directed the Austin, Texas-based bank to turn itself over to the Federal Deposit Insurance Corp. and is pursuing transactions likely to wipe out shareholders, Guaranty said in a July 23 filing with the Securities and Exchange Commission.

Bids for the bank, which had about $16 billion in assets and $9 billion in deposits, were due Aug. 18, the people said.

If regulators were to seize Guaranty, it would be the ninth biggest lender to fail in U.S. history, based on its assets and data compiled by the FDIC.

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They were one of the larger providers of "warehouse funding" loans to indpendent mortgage brokers.