Fortress to enter retail banking after US deal
FORTRESS Investment Group, the US listed private equity and hedge fund firm, is to become the latest company from the “shadow” banking system to move into retail banking.
The group, which has $26.5bn (£16.6bn) in assets, is to tie-up with private equity houses Crestview Partners and Lightyear Capital to pump $800m into First Southern, a Florida-based bank.
The deal comes just days after four private equity firms took over BankUnited in a government-managed auction and follows last year’s purchase of IndyMac’s assets by a group of hedge fund and private equity investors.
First Southern has less than $400m in assets and boasts a healthy balance sheet, meaning it could be used as a conduit for further acquisitions.
The Federal Deposit Insurance Corporation is drawing up a rulebook for private equity firms investing in banks and the deal will require regulatory approval.
Fortress plans to make former Bank of America vice chairman Eugene Taylor chief executive.
The founders of Fortress, Wes Edens and Pete Briger, weathered the recession of the early 1990s, grabbing assets at knockdown prices following the collapse of the US savings and loan industry.