Reports Say Spanish Bank Will Buy Guaranty Financial Group

A large Spanish bank has won the bidding for Austin-based Guaranty Financial Group, according to the Wall Street Journal and Bloomberg News.

Federal regulators who have essentially been running Guaranty in recent months have chosen Banco Bilbao Vizcaya Argentaria as the buyer.

The Wall Street Journal and Bloomberg News both said that regulators had chosen BBVA, citing unnamed sources close to the negotiations.

The Federal Deposit Insurance Corp. is expected to make the announcement Friday. Under the expected scenario, the FDIC will seize Guaranty, then sell most or all of it to BBVA.

Guaranty’s financial condition has been deteriorating for more than a year, and the bank said last month it had failed to raise urgently needed new capital and would probably fail.

Guaranty Bank has been warning that it is close to failure since late June.

The Federal Deposit Insurance Corp. received bids for Guaranty Tuesday, several sources close to the auction told the Dallas Business Journal.

The Wall Street Journal is reporting that Banco Bilbao Vizcaya Argentaria S.A. won the bidding. BBVA operates in the United States as BBVA Compass. It acquired Alabama-based Compass Bank in early 2007.

Sources told the Dallas Business Journal that U.S Bancorp of Minneapolis, Minn., and a private equity coalition led by Dallas banking billionaire Gerald J. Ford. also submitted bids. JPMorgan Chase and Wells Fargo Bank also looked closely at Guaranty, the sources say.

Representatives of Guaranty and BBVA Compass couldn’t be reached for comment.

If federal regulators follow their typical procedure, the Federal Deposit Insurance Corp. will take Guaranty into receivership at the close of business Friday, and Guaranty’s offices would reopen Saturday as branches of BBVA Compass.

Guaranty has 132 offices nationwide, 59 in California and 103 in Texas.

Guaranty Bank has about 30 Dallas-Fort Worth branches and $2 billion in local deposits as of June 30, 2008, the latest data available.

After Colonial Bank, which failed Aug. 14, Guaranty would be the second largest bank failure in the nation this year.

Guaranty is based in Austin, but its top executives work from its Dallas office in Preston Center.

Guaranty’s financial struggles are tied to its heavy investments in mortgage-backed securities, which today are worth far less than what the bank paid. After marking those assets to their current market value, Guaranty reported that it was out of capital and likely to fail.

California appeal
BBVA Compass likely was most attracted by Guaranty’s California holdings, said Dan Bass, managing director of Carson Medlin Co. investment bank in Houston.

“The demographics of California, it fits right in with what they’re trying to do,” he said.

BBVA operates the second-largest bank in Spain and the largest financial institution in Mexico, BBVA Bancomer. With BBVA Compass, the international company has focused on building a retail bank in U.S. border states and regions with large Spanish-speaking populations.

The U.S. unit is still a small piece of the BBVA empire. It contributed about 9% of the businesses total revenue, Bass said.

Untimely spinout
For 21 years, Guaranty was a subsidiary of Temple-Inland Inc., a maker of cardboard boxes and timber building supplies.

Guaranty was spun out of Temple-Inland at the end of 2007.

Temple-Inland (NYSE: TIN) completed the spinoff on Dec. 28, 2007, just as the excesses of the residential mortgage lending bubble became apparent. Guaranty has not reported a quarterly profit since it became a stand-alone institution.

Since its spinout from Temple Inland, investors Carl Icahn and Dallas billionaire Robert Rowling invested heavily in Guaranty. In July, the duo invested an additional $600 million in Guaranty. They control 37 percent of Guaranty stock.
http://www.bizjournals.com/dallas/stories/2009/08/17/daily35.html

http://www.puertorico-herald.org/issues/2002/vol6n29/Media2-en.html
US Seeks Information On BBVA Puerto Rico Money Laundering Case

July 15, 2002

In 2002 the US Justice Department asked Spain’s Supreme Court Judge Baltazar Garzon to provide information on allegations of money laundering involving Banco Bilbao Vizcaya Argentaria SA’s Puerto Rican unit,
They said the US authorities called on Garzon to supply documentation, including the testimony made to the Spanish judge by former BBVA co-chairman Emilio Ybarra and chief executive Pedro Luis Uriarte.

The Justice Department in Puerto Rico is investigating whether BBVA Puerto Rico broke “US criminal laws related to the laundering of money from drug traffic.”

BBVA Puerto Rico is alleged to have helped Colombian drug smuggler Marco Aurelia Royo Anaya launder money, using accounts in tax-havens such as the Cayman Islands, through the unit itself and its private banking arm, the sources said.

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