Federal Deposit Insurance Corporation. "FDIC Approves Assistance Plan for Bowery Savings Bank" in Press Releases of the Federal Deposit Insurance Corporation (October 2, 1985). https://fraser.stlouisfed.org/title/7031/item/642339, accessed on May 2, 2025.

Title: FDIC Approves Assistance Plan for Bowery Savings Bank

Date: October 2, 1985
PREVIOUS | NEXT
Page 1
image-container-0 FDII NEWS RELEASE ) FfOHAL WOSl1 INSUIANCE C0t,OIATIOH FOR IMMEDIATE RELEASE PR-148-85 (10-2-85) FDIC APPROVES ASSISTANCE PLAN FOR BOWERY SAVINGS BANK The Board of Directors of the Federal Deposit Corporation has approved a financial assistance package to recapitalize the Bowery Savings Bank, New York City, and facilitate its acquisition by an investor group led by Richard Ravitch, fonner Chainnan of both the Metropolitan Transportation Authority the New York State Urban Development Corporation. The assistance package from the FDIC is estimated to have a present value cost of $273 million. In addition, the FDIC will purchase a $100 million subordinated note in Bowery, and the private investor group will contribute $100 million in equity and install a new management team headed by Mr; Ravitch as Chainnan and Chief Executive Officer. The transaction was consumated on October 1, 1985, through the technique of merging Bowery into a newly-chartered stock savings bank using the Bowery name. All 1 oan and deposit customers of Bowery wil 1 automatically become customers of the new Bowery on the same tenns without the necessity of any action on their part. FDIC Chainnan William M. Isaac said: "The FDIC assistance plan, which is the first of its kind, provides Bowery Savings Bank the financial strength and managerial leadership to once again play a leading role in the New York market. The plan has been carefully structured to resolve Bowery's problems at a reasonable cost to the FDIC, while maintaining the institution entirely under private ownership and control. Our staff and the Ravitch group have - more - FEDERAL DEPOSIT INSURANCE CORPORATION, 550 Seventeenth St N.W., Washington, D.C. 20429 • 202-389-4221
image-container-1 - 2 - labored for months in an effort to put together a package that would protect Bowery's customers and enable the bank to provide the full range of financial services to its COfllllunity." Bowery, with assets of $5.3 billion, has experienced substantial losses each year si nee 1979, due primarily to the interest rate environment which drove up the cost of deposits much faster than Bowery could raise the yields on its loans and investments. Based upon Bowery's current negative book capital and the market depreciation in its asset portfolio, it is estimated that a payoff of the bank's insured depositors would have cost the FDIC about $620 mi 11 ion. The Bowery assistance package is the culmination of a competitive, nationwide process be.gun last year. A sizeable number of FDIC-insured institutions and other interested parties were invited to submit proposals for the acquisition of Bowery. The Ravitch proposal was the least costly and most attractive of the proposals received by the FDIC. The transaction was approved under the FDIC' s "Voluntary Assisted Merger Program," which establishes for granting financial assistance to facilitate a voluntary merger or acquisition involving an FDIC-insured savings bank that is in a weakened financial condition. The FDIC financial assistance will consist of the following: •Existing net worth certificates under Section 13(i) of the FDI Act, amounting to $220.1 million, will continue in effect in accordance with their terms. Because net worth certificates involve no exchange of money or other subsidy, the cost of this to the FDIC is zero. •The FDIC will make a payment in an amount sufficient to bring Bowery's negative net worth (with certain adjustments) up to zero under generally accepted accounting principles. The amount of this - more
image-container-2
About
Date: October 2, 1985
Part Of:
Collections within FRASER contain historical language, content, and descriptions that reflect the time period within which they were created and the views of their creators. Certain collections contain objectionable content—for example, discriminatory or biased language used to refer to racial, ethnic, and cultural groups.
More Information
Genre:
  • government publication
Rights
Metadata
Metadata (XML)
Metadata (JSON)
IIIF Presentation Manifest
View IIIF Manifest (JSON)