Using cutting edge research, this blog predicts and comments on the probability of failure for the nearly 7000 regulated banks monitored by the Federal Reserve. While most depositors may be protected by the FDIC, the importance of bank survival is still very important to bank clientele with lines of credit, mortgages, loans or other forms of financing. We seek to inform people that they might be at risk.
Tuesday, November 2, 2010
M&T Acquires Struggling Wilmington Trust
The Wall Street Journal reported today that M&T Bank acquired Wilmington Trust at a 46% discount over (or perhaps under is more accurate) its stock price. While over 90% of all bank failures seem to come from the weakest 1.5% of banks, this does not mean that banks further down the list are not also constrained in terms of their ability to operate. This has been the rationale behind presenting the rank of acquiring banks when possible each week. M&T is an incredibly healthy 6408th on the current list. Wilmington Trust? They are 383rd. If you factor in the roughly 3-5% probability of failure, their cost structure may simply be too great to continue as a going concern.
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