BBVA Takes Guaranty, Creates 15th Largest US Bank

BBVA Compass tonight announced the acquisition of the entire banking operations of Guaranty Bank, based in Austin, Texas. The new entity will not only create the 15th largest commercial bank in the United States, but also the fourth largest in Texas. BBVA Compass is a subsidiary of Banco Bilbao Vizcaya Argentaria (BBVA) a bank headquartered in Northern Spain. BBVA is the second largest bank in the country, followed by Banco Santander, which is also the largest bank in Europe. Both banks are aggressively expanding during the recession, both in the Americas as well as the Euro area. According to the Federal Deposit Insurance Corporation (FDIC) announcement on the deal, the agreement is a loss-share transaction on approximately $11bn of Guaranty Bank’s assets; BBVA Compass will share in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The FDIC will bear 80% of the first $2.3bn of losses and 95% of the losses above that threshold. “We would like to welcome Guaranty’s 300,000 customers to the BBVA Compass family,” said Manolo Sánchez, President and CEO of BBVA Compass, who added the full transition should be complete by early 2010, in an effort to calm affected clients. “They can rest assured knowing that they are now part of a larger organization that is considered one of the safest banks in the world,” he added. BBVA Compass was advised in the transaction by J.P. Morgan Securities and Cleary Gottlieb Steen & Hamilton. Guaranty Bank had total assets of approximately $13bn and total deposits of approximately $12bn. In addition to assuming all of the deposits of the failed bank, BBVA Compass agreed to purchase $12bn of the failed bank’s assets. Guaranty Bank had 103 branches in Texas and 59 branches in California. The new enterprise is worth $49bn in deposits and operations additionally in Alabama, Arizona, Florida, Colorado and New Mexico. Write to Jacob Gaffney.