Here’s one way to fast-track your expansion into the US market: buy a failed bank. On Friday, Guaranty Bank of Texas was seized by Federal regulators and sold to BBVA Compass, the US subsidiary of Spain’s Banco Bilbao Vizcaya Argentaria.
While the US has seen several banks fail in 2009 (81 as of this writing), BBVA’s involvement makes this a landmark liquidation. The last time an overseas bank received federal assistance in a failed bank deal was 1991, when the Bank of Ireland bought $1.8 billion worth of deposits from four New Hampshire banks. The BBVA takeover is worth over $12 billion.
What can we take away from this? Given the current economic downtown, there’s a lot of money in play for private sector companies who are willing to split some of the recovery burden with the US government. And while preference is generally given to US companies, foreign companies can compete alongside them, provided they can make the case that their winning the bid will be a net positive for the US economy. Despite the feds absorbing significant losses from Guaranty’s failure, the end result was a far softer landing thanks to BBVA’s involvement.