Robert Klingler, a partner at Bryan Cave LLP in Atlanta, works in the middle of one of the most active areas of the country in terms of TARP issues and troubled banks facing regulatory issues.
said this is the first time he's
seen a potential bidder on TARP debt decline to commit to the Federal Reserve to not exercising the voting rights.
"The Federal Reserve has a rule that you cannot obtain more than 33 percent of the total equity without becoming a bank holding company," Klingler
"(Buyers) generally don't want to become a bank holding company.
So they either don't buy more than 33 percent, or they sign passivity agreements with the Federal Reserve saying they will not exert control.
But Equity Bank
is doing the exact opposite."
said if Equity buys even a portion of Bank of Blue Valley's TARP debt, it will have the right to elect two people to the holding company's board.
said Bank of Blue Valley
can't raise money or pay common shareholders until it repays TARP dividends.
"So by acquiring the preferred stock, whoever owns it has a significant poker hand to play with at that point in trying to encourage a transaction that they prefer," Klingler