Recession toll rises to 23

Fresh victims of recession are Banks in Colorado and North Carolina.The banks were shut as a loss of jobs shrinks household wealth in the deepest recession in last 25 years. With these banks shut down, the toll of US Bank failures has risen to 23 this year.

New Frontier Bank in Greeley, Colorado, with $2 billion in assets and $1.5 billion in deposits, and Cape Fear Bank in Wilmington, North Carolina, with $492 million in assets and $403 million in deposits, were shut today by state regulators.

The U.S. has lost about 5.1 million jobs since the recession began in late 2007 and unemployment jumped to 8.5 percent in March, the highest since 1983.

The Colorado failure will cost the FDIC’s insurance fund $670 million, while the cost to close Cape Fear is $131 million, the agency said in separate statements.

Merger of 2 Kerala-based private banks

The merger process of the two Kerala-based private banks — Catholic Syrian bank (CSB) and the Federal Bank — is likely to materialise soon with a swap arrangement in the works.

Federal Bank has agreed to exchange 1.75 shares for one share of CSB and also expressed its readiness to meet the other demands, including protection to CSB employees. The Aluva-based Federal Bank has also offered the ‘best of both the banks’ to the employees of CSB in the event of a merger. Over 45 per cent of the CSB shareholders are reportedly in favour of the merger under the swap arrangement.

Federal Bank holds a 4.99 per cent stake in CSB, which it had bought from Thailand-based Surachan Chawla who had in 1994 bought a 38 per cent stake in the bank. Chawla now has a 27 per cent stake after a rights issue. There is a mutual understanding between him and Federal Bank to sell the remaining shares.