Risk Professional: Puerto Rico suffers rush of bank failures
One might imagine that the island of Puerto Rico, which is often seen as the 50th-and-a-half state of the USA would have suffered badly in the financial crisis that some say is over. But, perhaps surprisingly, not a single bank in the island had failed since at least 2001. Until last Friday when the regulators rolled into town, in one day putting the chains on three banks: in that nine year period, New York has had only four bank failures.
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The banks that have failed, Eurobank, Westernbank and RG Premier Bank have all been taken over by other financial institutions. The same day a further four banks were closed in Washington, Missouri and Michigan.
The banks that have failed are, mostly, small banks: they had, generally, no more than approx USD3,000 million in "assets."
The "assets" have been sold for face value or very close to face value - but subject to a claw-back from the purchasing bank if they fall below valuation.
And the deposits, the only true measure of the goodwill / brand value in a bank, have in most cases been transferred at zero premium.
The brands, themselves, will gradually disappear in most cases.
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