US authorities call time on Colonial Bank

by Gill Montia

Story link: US authorities call time on Colonial Bank

US authorities have called time on Colonial Bank, selling its assets to BB&T Corp, now the eighth largest bank in the country, by deposits.

The Alabama-based lender succumbed to the credit crisis with assets of $25 billion, the bulk of which are being purchased by BB&T.

The collapse is the largest in the US banking sector since the failure of Washington Mutual in September of last year.

According to reports, the Federal Deposit Insurance Corp will pick up a bill for around $2.8 billion and share future losses on Colonial loans that turn sour with BB&T.

The lender was heavily exposed to the Florida property market downturn and its holding company is currently under investigation for both mortgage fraud and accounting irregularities.

Colonial has 346 branches, which it is understood will reopen under the BB&T brand.

US banking failures now number 77 for 2009 and according to a report in The Times, pressures on small lenders exposed to the US property market are increasing.