US authorities seized nine failed banks yesterday, the most in a single day since the financial crisis began and the latest stark sign that substantial parts of the country’s banking industry are being crippled by bad loans.
The move brought the total number of failed banks in 2009 to 115 - their highest annual level since 1992 - with analysts expecting more to come. Among the lenders seized Friday was Los Angeles-based California National Bank, in what was the fourth-largest US bank failure this year.
The largest institution to fail in the current financial crisis was Washington Mutual, which boasted $307 billion (€208 billion) in assets when it was closed in September 2008.
US Bancorp yesterday acquired the nine banks that had been held by FBOP Corp, picking up $18.4 billion (€1.25 billion) in assets and $15.4 billion (€10.5 billioon) of deposits.
Visibly worried employees lined up to file into Cal National's head offices in the heart of a deserted downtown Los Angeles yesterday evening, where they had their employers' fate explained to them, regulators said.
"We're getting ready to turn everything over to US Bank," said Roberta Valdez, a spokeswoman for the Federal Deposit Insurance Corp, which helped supervise the transfer of FBOP's assets. "They will continue to operate as normal in the interim," she added, referring to lenders acquired from FBOP.
US Bancorp - which has been buying up distressed assets this year - is picking up the lenders once owned by FBOP, a private Illinois group with over $18 billion in assets that owned banks in Texas, Illinois, Arizona and California.
Cal National is FBOP's largest bank by branches. Others that will now go under the US Bancorp umbrella included BankUSA, Citizens National Bank, Madisonville State Bank, North Houston Bank, Pacific National Bank, Park National Bank, San Diego National Bank, and the Community Bank of Lemont.
Reuters