Failure of Corus Bank puts condo loans up for sale

Author : jignesh

Chicago’s Corus Bank, which made a disastrous bet on condo towers in South Florida, was closed by federal regulators on Friday.

MB Financial Bank of Chicago is assuming Corus Bank’s 11 branches and $3 billion in cash and marketable securities. That would leave about $4 billion more in assets, which the FDIC plans to sell within 30 days in a private placement. Corus has about $1 billion of loans in South Florida.

There has been speculation that Miami Dolphins owner Stephen M. Ross might be interested in acquiring the Corus property. Ross is CEO of New York real estate giant Related Cos. and is also a business associate of Jorge Perez – the Miami condo king who runs Related Group.

Federal regulators have preliminarily approved a shelf charter for New York-based SJB Bank, which is led by Ross, Related Cos. President Jeff T. Blau and Bruce A. Beal Jr., an executive VP at Related Cos.

However, any buyer of the Corus assets could presumably just use equity investments or other financing without having to form a bank.

Should SJB Bank be formed, Adolfo Henriquez, former CEO of Florida East Coast Railway and chairman of Gibraltar Private Bank in Coral Gables, would serve as its CEO and president.

The application lists Michael J. Brenner and Richard L. O’Toole as organizers. It names former Goldman Sachs real estate investment head Stuart M. Rothenberg, Robert G. Eubanks and Jeffrey S. Quicksilver as directors.

Corus Bank’s failure is expected to cost the FDIC $1.7 billion. It is the 90th FDIC-insured institution to fail this year.

Corus Bank ramped up its condo construction and conversion lending in South Florida in 2002 at the start of the real estate boom. It rode the wave hard and funded dozens of projects, including 13 with mortgages of more than $100 million.

The bank also funded projects in other real estate markets that got caught in the bubble, such as Las Vegas, California and other parts of Florida.

The Corus branches were all in the Chicago area, but it attracted most of its deposits from high-rate certificates of deposit over the Internet. This helped it to raise money to lend out from all corners of the country.