FDIC puts out new call for ShoreBank bidders

By Becky Yerak
Posted Aug. 10, 2010 at 8:23 p.m.

The Federal Deposit Insurance Corp. has told ShoreBank that it has begun the process in which it ultimately seeks bidders for the undercapitalized bank, according to a report Tuesday afternoon from Fox Business.

Brian Berg, a ShoreBank spokesman, would neither confirm nor deny the report that the bank’s days as an independent institution are numbered. The bank continues to try to look at options to raise capital to stave off seizure by regulators.

Fox Business Network reported that ShoreBank has been told by the FDIC that “it’s heading for the FDIC resolution process” despite its political connections.

ShoreBank has brought in new management in recent months to try to save the bank. Management is also looking at whether it can buy certain assets if the bank fails; there has been talk about trying to save the name, for example.

It’s the second time that the FDIC has begun the receivership process for the Chicago-based bank.

In May, the FDIC began seeking bidders for ShoreBank as part of a package deal with Midwest Bank, which has since failed. Midwest was considered a relatively desirable franchise and was acquired by FirstMerit on its own.

ShoreBank, an active lender in lower-income urban areas hit especially hard by the recession, has been trying to raise capital from existing investors and other institutions.

ShoreBank has received about $150 million in commitments from private investors, but the government hasn’t been forthcoming with $75 million in federal dollars it was hoping to get.

Some believe that ShoreBank, whose financial condition has continued to deteriorate, will need as much as $300 million, in new capital.


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