Private equity firms invest in banks...again

May 28, 2009 | By Jim Kim

Private equity firms sense big bargains when it comes to distressed banks. The latest: Fortress Investment Group, Crestview Partners and Lightyear Capital have struck a preliminary deal to purchase a non-controlling stake in First Southern Bancorp, of Boca Raton, according to media reports. The bank has just $400 million in assets, but the significance is larger.

Private equity firms seem to be over their historic reticence to buy banks, which are highly regulated, because they are drawn by their sheer potential. Recently, a club including the Carlyle Group, Blackstone Group, Centerbridge Capital Partners and WL Ross bought ailing BankUnited, also of Florida. We may see more deals for small banks materialize along these lines; many are ailing and looking for relief. Do not be surprised if clubs that include Goldman Sachs and Toronto-Dominion Bank, and J.C. Flowers eventually invest in banks or thrifts.

For more:
- here's the Reuters article