Magazine article American Banker

Morgan Stanley to Advise FDIC on Selling Continental Illinois

Magazine article American Banker

Morgan Stanley to Advise FDIC on Selling Continental Illinois

Article excerpt

Morgan Stanley to Advise FDIC on Selling Continental Illinois

The Federal Deposit Insurance Corp. has selected Morgan Stanley & Co. to advise it on how to relinquish its majority ownership in Continental Illinois Corp.

"The FDIC concluded that Continental Illinois has progressed sufficiently to begin considering the sale of its stock position. No decision has been made on timing or manner of the stock sale,' the FDIC said in a statement.

The FDIC pumped $4.5 billion into Continental in 1984 to save the bank holding company from collapse. As a result of that restructuring, the FDIC now has $320 million of Continental adjustable-rate preferred stock and $720 million in preferred stock that is convertible into 160 million shares of Continental common.

The FDIC also could collect up to 40 million additional shares of Continental common stock depending on how collections go on loans transferred to the FDIC as part of the restructuring. If, for instance, losses on those loans exceed $800 million, the FDIC would end up with 100% ownership of Continental Illinois Corp.

The question of how Continental would be returned to the control of nongovernment investors has been of great interest to analysts and industry observers.

Last week, former FDIC chairman William M. Isaac, who was one of the key architects of the Continental rescue, said Continental could be removed from government control by selling the stock to a group of investors or another banking institution or by a broader sale of the stock to the public. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.