(Reuters) – CIT Group Inc (CIT.N), a commercial U.S. lender struggling to finance its business, said late on Sunday that it remains in active discussions with regulators on measures to improve its near-term liquidity position.
The company said in a statement it is also actively discussing liquidity solutions that do not involve access to the Federal Deposit Insurance Corp’s (FDIC) Temporary Liquidity Guarantee Program.
CIT said it is discussing the near-term transfer of assets into CIT Bank through Section 23A waivers and the transfer of its vendor-finance and trade-finance businesses into CIT Bank.
If approved, these transfers would enhance the company’s liquidity position, CIT said.
CIT converted to a bank-holding company in the fourth quarter of 2008 to qualify for U.S. government funds but has so far been unable to secure approval from the FDIC to issue government-backed debt through the Temporary Liquidity Guarantee Program.
On Friday, the company warned that there “can be no assurance that CIT’s application will be approved by the FDIC,” which sent its shares down as much as 39.2 percent.
The delay in getting FDIC approval has driven CIT, which lends to small and medium-sized companies, into a liquidity crunch.
Over the weekend, the Wall Street Journal and other media reported that the company had hired a top law firm to explore a possible bankruptcy filing.
The government has made it clear that a possible bankruptcy by CIT is not seen as a systemic risk to the financial system, the Wall Street Journal reported, since other lenders including JPMorgan Chase & Co (JPM.N) or Deutsche Bank AG (DBKGn.DE) can take on many of the same loans in which CIT specializes.
(Reporting by Ajay Kamalakaran in Bangalore; Editing by Muralikumar Anantharaman)