There were concerns on whether the ratings of BB&T and its subsidiary Branch Banking Trust would retain their status after the acquisition of Colonial BancGroup on Friday.
After being appointed as receiver of Colonial BancGroup, the Federal Deposit Insurance Corporation approved of the sale of Colonial to BB&T as far as its deposits and assets. Deposits from the failed bank were valued at $20 billion while its assets came in at $25 billion, of which $22 billion was acquired by BB&T.
According to ratings service Fitch Ratings, BB&T still have their A+ rating on long-term debt, along with Branch Banking Trust, as well as an F1 rating on short-term debt for both of them; both indicate that there is only a low to moderate risk to the company for the short and long term.
The fall of BancGroup is the 6th largest in history at this time, but a number of industry watchers say it’ll probably end up the 2nd largest failure before the smoke clears,
As far as the rest of Colonial’s assets, they will be held by the FDIC, which say will cost the Deposit Insurance Fund another $2.8 billion. At the end of March the Fund only had $13 billion left.
Concerning the Deposit Insurance Fund, so far in the second quarter it has cost just under $16 billion in relationship to bank failures. That means it is now in the red for just under $3 billion.
Before you panic though, the fund does have an existing credit line of $30 billion with the Treasury, which is almost sure to be increased behind the scenes without any public disclosure in order to keep Americans from rising up even more against the ongoing banking and other bailouts.
Troubles are sure to increase though, as about 150 financial institutions considered to be at risk have approximately $193 billion in deposits at risk, and that probably is much larger in the number of institutions and deposits at risk we’re aware of.
