Yesterday, the Office of the Commissioner of Financial Institutions of the Commonwealth of Puerto Rico closed Westernbank Puerto Rico, headquartered in Mayaguez, Puerto Rico, and the FDIC was appointed receiver. As receiver, the FDIC entered into a purchase and assumption agreement with Banco Popular de Puerto Rico, headquartered in San Juan, Puerto Rico, to assume all of the deposits of Westernbank Puerto Rico. The Federal Reserve also approved the assumption of deposits under the Bank Merger Act.
As of December 31, 2009, Westernbank Puerto Rico had approximately $11.94 billion in total assets and $8.62 billion in total deposits. Banco Popular de Puerto Rico did not pay the FDIC a premium to assume all of the deposits of Westernbank Puerto Rico but did agree to purchase approximately $9.39 billion of the failed bank's assets. The FDIC will retain the remaining assets for later disposition. The FDIC and Banco Popular de Puerto Rico entered into a loss-share transaction on $8.77 billion of Westernbank Puerto Rico's assets. The FDIC also received a value appreciation instrument that serves as additional consideration for the transaction.
The FDIC estimates that the cost to the Deposit Insurance Fund will be $3.31 billion. Westernbank Puerto Rico is the 60th FDIC-insured institution to fail in the nation this year and was the third institution closed in Puerto Rico yesterday.