IndyMac Bought by Consortium

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As expected, the Federal Deposit Insurance Corp. confirmed Friday that a consortium of private equity and hedge fund firms, including J.C. Flowers & Co. and Paulson & Co., has agreed to buy the assets of IndyMac Federal Bank in a deal valued at $13.9 billion.

The FDIC, which took over the failed Pasadena mortgage lender in July after a run on the bank, is selling bank’s assets to IMB Management Holdings LP. The group’s leaders include buyout specialist Christopher Flowers, hedge fund operator John Paulson, and Steve Mnuchin, the chairman of Dune Capital and a former Goldman Sachs executive. Affiliates of billionaire investor George Soros and Dell Inc. Chief Executive Michael Dell also are among the investors.

The Office of Thrift Supervision said Friday that it granted preliminary clearance to IMB’s application to operate IndyMac as a federal savings association under the office’s supervision. Terry Laughlin, who previously headed Merrill Lynch Bank & Trust, will serve as the bank’s chief executive. There was no mention of whether the new owners intend to keep the headquarters in Pasadena.

IMB, of which Mnuchin is chairman and chief executive, will get 33 branches with about $6.5 billion in deposits. A loan portfolio and securities portfolio worth about $22.9 billion, and loan servicing portfolio worth more than $175 billion. The investor group agreed to capitalize IndyMac with about $1.3 billion in cash when the transaction closes, which is expected to happen in late January or early February, said the FDIC, which recently loosened regulations to enable private investor groups without bank charters to bid for failing lenders.

IndyMac was among the largest of 25 financial institutions that collapsed in 2008.

The FDIC said it entered into a loss share agreement with IMB, in which IndyMac will assume the first 20 percent of losses on a portfolio of qualifying loans. After that, the FDIC will assume 80 percent on the next 10 percent of losses, and 95 percent on losses thereafter. The deal is expected to cost the FDIC’s insurance fund between $8.5 billion and $9.4 billion.

Not involved in the deal is IndyMac Bancorp. Inc., the bank’s former holding company, which is in bankruptcy proceedings with plans to liquidate.

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