4 ms·

The bank that acquires does so with a haircut and a hit to the balance sheet from the overall entity having all the liabilities of the combination and the asset

by wbl 3y ago

The bank that acquires does so with a haircut and a hit to the balance sheet from the overall entity having all the liabilities of the combination and the assets. So the insurer throws in some money to recapitalize. Remember everyone needs this deal to be smooth and the new entity toppling is not smooth.

landemva 3y ago
The buyer gets to sniff around and accept the offer for the accounts and balance sheet. The insurer, FDIC or sometimes NCUA, takes the difference.
taeric 3y ago
Right, but that is only needed if the assets don't cover the liabilities. Numbers given were covered. Naive reading of that is that they were not liquid?
- wbl 3y ago
  The ratio of assets to liabilities has to be greater than one, and generally quite a bit greater for regulators to be happy.
  - taeric 3y ago
    It was greater, per story? That is why I quoted them.