Overview
Qualified asset buyers may be offered the opportunity to acquire assets of certain failing banks marketed by the FDIC around the time of failure. After executing a confidentiality agreement, interested bidders are granted access to failing bank information to conduct due diligence and review the FDIC transaction terms. The FDIC conducts a sealed, competitive bid process and evaluates bids against the FDIC's cost of liquidation and the cost of other bids.
The FDIC does not publish lists of potentially failing banks, as this information is a confidential regulatory matter. Invitations to access information about a specific acquisition opportunity may be extended to asset buyers after completing an application process and receiving approval from the FDIC.
Confidentiality
Loan pools offered to asset buyers in conjunction with franchise sales offered to banks is highly confidential as the failing bank is open and operating until the chartering authority closes the bank. All franchise and asset sales marketed prior to a bank failure are highly confidential.
All parties invited to an acquisition opportunity must execute a confidentiality agreement prohibiting the sharing of all information outside the invited firm’s organization.
Timeframe
The FDIC does not control the timeframe or pace of failing bank acquisition opportunities. Typically, the marketing of loan pools prior to bank failure is rapid and may be concluded within a couple of weeks. A sample of loan documents may be available in a virtual data room for each loan pool offered.
Transactions
In some cases, FDIC may offer loan pools to qualified asset buyers along with the franchise sale to qualified banks prior to the bank failing. Loan pools will be structured by type of loan.
Bidder Qualification
Substantial financial resources and secondary market experience will be required to bid on loan pools. Asset buyers may qualify for the sale of larger potentially failing bank loan pools by completing an application and receiving FDIC approval. The application and approval must be completed in advance of any announcement of an opportunity prior to bank failure. If qualified, asset buyers may access loan information in a virtual data room after executing a confidentiality agreement. The application and more information about qualifying for loan pools offered prior to bank failure will be forthcoming.
Transactions and Financing
Transactions meeting certain size parameters may include financing options for single family, commercial and industrial, and commercial real estate loan pools. The FDIC uses various template forms during these loan sales, some of which include:
- Loan Sale Agreement
- Financing Term Sheet
- Purchase Money Note
- Account Control Agreement
- Custodial and Paying Agency Agreement
- Security Agreement
- DTC Eligible Global Note
Sample template forms are subject to change in which case newer versions will be posted.
Resources
Questions about loan sales prior to bank failure can be submitted to ProspectivePurchaser@fdic.gov.
- Information about Loan Sales