SRZ has extensive experience structuring private investments in U.S. banks and bank holding companies. The current U.S. financial crisis has left many depository institutions in critical need of additional capital and liquidity. Because these institutions often need to raise significant amounts very quickly, private equity investors offer significant advantages over the public markets. Moreover, many private equity firms believe the current environment presents attractive buying opportunities.
However, the highly regulated nature of U.S. depository institutions means that investments in them are unlike any other investments a private equity firm might make. From start to finish, greater attention and skill are required to get the deal done on time and to avoid unintended or unnecessary regulatory consequences. This is especially true where an investor seeks to acquire 10% or more of an institution or its holding company. Improperly done, such an investment could have a devastating effect on the firm, including restricting the firm’s other investments and subjecting its worldwide activities to periodic examination, reporting requirements and capital requirements.
As a result, most private equity investments in U.S. depository institutions, or their holding companies, are structured as minority, passive investments in order to avoid triggering the U.S. laws that govern depository institution holding companies and the effect those laws would have on the acquiring firm, its controlling or larger investors and their other activities. But with careful planning and flexibility on structure, opportunities exist in the banking sector for private equity firms to acquire large interests, including buyouts, with little or no impact on the firm and its investors' other activities.
SRZ maintains one of the world’s preeminent investment management practices, representing numerous leading private equity firms, more than one half of the world’s 100 largest hedge funds, and such leading financial institutions as Bank of America, BNY Mellon, Barclays Global Investors, CIBC, Citigroup, Credit Suisse, JPMorgan Chase, and UBS. In addition, we have actively advised clients on issues of banking law and regulation for more than 25 years. In particular, we have been at the intersection of private equity and financial institutions, guiding private investors through the complex issues that accompany an investment in a regulated entity and advising depository institutions and their holding companies in connection with their private investment fund and merchant banking activities.
We have served as lead or regulatory counsel on multi-billion dollar private equity investments in, or acquisitions of, depository institutions and their holding companies. We advised clients on deals involving Washington Mutual Inc., Merrill Lynch & Co. Inc., First Data Corp., Doral Financial Corp., GMAC, Bank Leumi and HSH Nordbank AG. In obtaining necessary approvals for investments and deals, we have practiced and/or appeared before the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the bank regulatory agencies of all 50 states, the District of Columbia and Puerto Rico.