US drawing rules to spur PE bank buyouts

The plan, which has yet to be finalized, may require private equity companies to inject substantial capital into lenders and to agree not to sell them for at least two years, FT reported.

The paper cited analyst estimates that private equity firms could provide up to $50 billion to recapitalise banks. The Federal Deposit Insurance Corporation, which is charged with taking over failed lenders, is leading the drafting of new rules, the paper quoted people familiar with the situation as saying.

The FDIC board, which also includes representatives from other banking regulators, is expected to discuss the matter in the next few weeks, it said.

Buy-out funds wanting to buy a troubled bank would have to disclose performance measures and marketing materials to allay fears that they might use the banks to subsidize other companies in their portfolio, it added.

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