Washington Mutual is reportedly looking to The Carlyle Group and The Blackstone Group as potential buyers alongside Texas billionaire and bank investor Gerald Ford.
The US’ largest savings and loan company is seeking private equity buyers following failed discussions with several publicly listed banks, according to the Wall Street Journal.
It is unclear if the discussions will result in a deal or how it would be structured to avoid forcing the potential private equity buyers to register as bank holding companies under the provisions of the 1956 US Bank Holding Company Act.
Various media reports had previously cited JPMorgan, Citi and Wells Fargo, among others, as banks considering buying Washington Mutual.
Yesterday, ratings agency Standard & Poor’s cut the Seattle-based thrift’s counterparty credit rating from CCC/C to BB-/B and reduced its preferred stock rating from CC to B-.
It also warned that if the ailing bank is not acquired in its entirety, creditors face losses since assets held at the holding company level are not sufficient to cover more than $14.4 billion (€9.8 billion) of rated unsecured debt the company has outstanding.
Last week, TPG, which in April led a $7 billion private equity infusion into Washington Mutual, waived the price reset payment provisions on its investment – an anti-dilution measure that would give it the right to be made whole on its common share should the bank raise more than $500 million of additional capital or sell itself for a price below TPG's $8.75 entry price. TPG said at the time that the move was meant “to maximise the bank’s flexibility in this difficult environment”
Shares of Washington Mutual opened the day at yesterday’s closing price of $2.26.
Washington Mutual did not return calls seeking comment before press time.