EoW November 2009

Transat lant ic Cable

Tesla said that the proceeds from the government loan, awarded in June, did not contribute in any way to the sterling results achieved by its Roadster in July.

Banking

Washington, which has its reasons, helps a Spanish company to buy a Texas bank In one of the largest US government-assisted deals involving a foreign company, Guaranty Bank (Austin, Texas) was sold on 22 nd August to Banco Bilbao Vizcaya Argentaria SA (BBVA), of Spain. Federal regulators seized the deeply troubled Texas lender and simultaneously brokered the sale of its branches as well as most of its deposits and assets to BBVA Compass, the Spanish bank’s American subsidiary. The US government will absorb most of the losses on $9.7 billion – more than 80% – of the Guaranty assets included in the transaction. Washington also agreed to take the bulk of the losses on all of Guaranty’s loans. While the US Federal Deposit Insurance Corporation (FDIC) has been known to employ loss sharing as a deal sweetener, the offer to cover quite so much of a failed bank’s obligations is extraordinary, and such agreements are seldom made available to overseas buyers. Washington clearly had a strong interest in the resolution of the Guaranty Bank failure (the tenth largest in US history and the fourth largest since the financial crisis began last year) and in a smooth orchestration of the BBVA takeover, with its intimation of returning confidence in the financial system. Eric Dash, who covers banking for the International Herald Tribune , wrote that analysts say the BBVA deal may signal that the FDIC will henceforward be more open to bids from foreign banks. In the meantime, Banco Bilbao Vizcaya Argentaria is as full of plans for its acquisition as any triumphant winning bidder. Guaranty Bank is to add another 103 branches in Texas and 59 in California, where BBVA has been trying to establish itself. That will bring the total of locations to 767 in seven Sun Belt states and make Guaranty the 15 th largest commercial bank in the nation, with some $49 billion in deposits. (“US Helps Spanish Company to Buy Texas Bank,” 21 st August) Along with its Spanish rival Banco Santander, BBVA has been expanding in fast-growing markets that have strong ties to Latin America. José Maria Garcia Meyer, the head of BBVA’s American operations, said in a statement that the Guaranty Bank transaction further demonstrates “BBVA’s clear commitment to building its US franchise.”

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