Treasury Weighs Selling TARP Bank Shares in Pools

[Olmsted]

This could present interesting opportunities for those of us watching the community bank space.  Also could be an interesting vehicle for healthy, acquisitive regional banks to do some growth.  There's going to be an ongoing arb over the coming years of rolling up deposits and consolidating overhead and regulatory costs. 

 

http://www.bloomberg.com/news/2012-05-17/treasury-weighs-selling-tarp-bank-shares-in-pools.html

 

The U.S. Treasury may pool stakes in small banks bailed out during the financial crisis to entice potential investors as the Obama administration winds down the Troubled Asset Relief Program.

 

“Some of the investments are smaller and it may not be possible to auction them individually,” Tim Massad, the Treasury Department’s assistant secretary for financial stability, said in an interview. “So one of the things we’re looking at is pooling those investments together.”

 

.The Treasury’s plan reflects the challenge of unwinding holdings in lenders that are still trying to recover from the six-year residential real estate slump. By combining stakes of small banks, the department may be able to attract investors who would not want to buy shares of those banks individually.

 

Most of the 343 bailed-out banks still in TARP will be unable to repay $12 billion in taxpayer funds they hold, according to the Treasury. For those banks that don’t repay, the administration will try to sell its stakes in the remaining lenders through auctions, and if it can’t, will then pool together shares of different institutions, Massad said.

[HJ]

They should probably do a CDO with it.  Just ask Morgan Keegan for a template of the existing Bank TRUPs CDOs!  :D

 

This could present interesting opportunities for those of us watching the community bank space.  Also could be an interesting vehicle for healthy, acquisitive regional banks to do some growth.  There's going to be an ongoing arb over the coming years of rolling up deposits and consolidating overhead and regulatory costs. 

 

http://www.bloomberg.com/news/2012-05-17/treasury-weighs-selling-tarp-bank-shares-in-pools.html

 

The U.S. Treasury may pool stakes in small banks bailed out during the financial crisis to entice potential investors as the Obama administration winds down the Troubled Asset Relief Program.

 

“Some of the investments are smaller and it may not be possible to auction them individually,” Tim Massad, the Treasury Department’s assistant secretary for financial stability, said in an interview. “So one of the things we’re looking at is pooling those investments together.”

 

.The Treasury’s plan reflects the challenge of unwinding holdings in lenders that are still trying to recover from the six-year residential real estate slump. By combining stakes of small banks, the department may be able to attract investors who would not want to buy shares of those banks individually.

 

Most of the 343 bailed-out banks still in TARP will be unable to repay $12 billion in taxpayer funds they hold, according to the Treasury. For those banks that don’t repay, the administration will try to sell its stakes in the remaining lenders through auctions, and if it can’t, will then pool together shares of different institutions, Massad said.

[Guest wellmont]

I believe the auctions are open to accredited investors only. and the tarp warrants are not being auctioned to the public anymore. this is my understanding and could be off base. but what tends to happen from my observation is the UST conducts an auction of tarp pref for accredited investors. event driven managers come in and buy the auction, then offer to exchange the tarp pref for a new convertible preferred or common stock. the bank may conduct a private offering of stock at the same time to improve it's balance sheet. at that point the bank buys back the tarp warrants from the UST.  there is a lot of refinancing going on at the community level.