BankUnited CEO: PE Opportunity To Buy Troubled Banks Is Over

Don’t expect PE firms to be major acquirers of failing bank institutions, says John Kanas, BankUnited’s chairman, president and CEO.

Kanas, who spoke Thursday at the Bloomberg Dealmakers Summit, said there will be a “substantial amount” of M&A in the banking sector due to over-capacity and weak financial institutions. But any mergers will be between the banks themselves and PE will probably not be part of it, he said.

“The opportunity for private equity [to buy] failing institutions is greatly diminished,” Kanas told peHUB on the sidelines of the event. “The game is over…The regulators clearly prefer that consolidation take place between financial institutions themselves.”

Kanas told peHUB that there may be an opportunity for buyout shops to take partial, noncontrolling investments in banks. He also declined to comment on reports that BankUnited was considering going public and had selected underwriters.

Kanas, who spoke on the panel “Financial Dealmaking: Two Years after the Crisis,” said BankUnited would look to buy banks that are “not likely to fail” but find it difficult to make acceptable returns. There are more than 8,000 banks in existence now but “we only need 5,000 banks,” he said.

“We have simply chartered too many banks during the last ten years,” Kanas said during the panel.

In 2009, the Carlyle Group was part of a group of investors that took over BankUnited, which was shut by federal regulators. The consortium, which included the Blackstone Group, Centerbridge Partners and W.L. Ross & Co., invested $900 million in the Miami Lakes, Fla. lender. Kanas, who is the former head of North Fork Bancorp, was named BankUnited’s CEO.

Kanas said about 50 to 60 parties conducted due diligence on BankUnited. But only three actually made bids. “Ours was the best bid,” he said.