The privately owned lender on Chicago’s South Side near the home base of President Barack Obama, has been ordered by the Federal Deposit Insurance Corp (FDIC) to raise its capital levels significantly, failing which it could be taken over.
Despite more than $135 million in rescue capital from top firms on Wall Street like Goldman Sachs Group Inc, Citigroup, JPMorgan and Bank of America, the prospect of garnering sufficient funds to keep the company afloat is waning, the business daily said.
ShoreBank, which has $2.3 billion in assets, is hoping for an additional $75 million in federal support via the Troubled Asset Relief Program, the Wall Street Journal said.
However, Federal Reserve’s analysis shows that the lender would be insufficiently capitalized even with a new capital injection of $200 million, sources told the paper.
The bank lost $39.5 million in the second quarter, according to documents filed with the Federal Deposit Insurance Corp, it said.
ShoreBank’s spokesperson and the FDIC declined to comment to the Wall Street Journal. They could not immediately be reached for comments by Reuters outside regular U.S. business hours.
Small banks across the nation are failing at a rapid pace due to troubled real estate loan portfolios, but ShoreBank’s dedication to community development and environmental causes apparently secured its special status.
(Reporting by Archana Shankar in Bangalore; Editing by Muralikumar Anantharaman)
