The Treasury Department is planning to wind down its Troubled Asset Relief Program investments in six financial institutions by auctioning off approximately $358 million in preferred stock and subordinated debt investments.
The Treasury said Tuesday that it would begin auctioning its stake in the six companies on Wednesday. The auction is
The six companies whose shares the Treasury plans to auction are Flagstar Bancorp in Troy, Mich., with $14 billion of assets; Carolina Bank Holdings of Greensboro, N.C. with $676 million of assets; First Trust in New Orleans, with $769 million of assets; National Bancshares in Bettendorf, Iowa, with $962 million of assets; Ridgestone Financial Services in Brookfield, Wis., with $395 million of assets; and FC Holdings in Sugar Land, Texas, with $610 million of assets.
The Treasury holds $358 million in net outstanding investments in the six banks, according to data from ProPublica. Of that total, $267 million is invested in Flagstar.
Flagstar's Tarp infusion was tied to mortgage lender's ability to find additional capital elsewhere. In early 2009, the company received $250 million from New York private equity firm MatlinPatterson Global Advisors. MatlinPatterson's stake has grown since then as the company has looked to raise additional capital a few times to deal with its problems. The private-equity firm declined to say if it plans to bid on the Tarp stake.
The Treasury's auctions for these banks are part of its strategy to sell its positions in 53 of the 199 financial institutions whose debt it holds, according to the release. A Treasury representative was not immediately available to provide further details.
The Treasury has so far recouped $268 billion through sales of its Tarp investments, compared to $245 billion it initially invested, it said. The auction announced Tuesday will be open to qualified domestic institutional buyers and accredited investors.
