California regulators gave approval to Chevy Chase, Md.-based CapitalSource Inc. to buy the retail banking assets of Fremont General Corp.
The move by Fremont, which moved its headquarters earlier this year from Santa Monica to Brea, will help prevent the bank from declaring bankruptcy. Last year Fremont was hit by rising loan delinquencies and was forced by the FDIC to stop making subprime loans. Fremont was once one of the largest subprime lenders in the nation.
The deal still requires approval of the Federal Deposit Insurance Corp., CapitalSource said in a statement Friday.
Fremont agreed in April to sell its retail bank assets to CapitalSource for $58 million in cash plus a 2 percent premium to get $5.6 billion in deposits, CapitalSource also agreed to loan Fremont as much as $200 million to help insure the transaction was approved.
If the deal is completed, CapitalSource will take over all 22 of Fremont’s retail bank location in Southern California and will name them CapitalSource Bank.