Puerto Rico-based Doral Bank's troubles with the Federal Deposit Insurance Corporation have grown.
On Sept. 26 Doral received a letter from the FDIC stating it found Doral to be "significantly undercapitalized," rather than "undercapitalized," as the FDIC had stated in an earlier letter.
In August 2012, Doral reached a consent order with the FDIC and the Commissioner of Financial Institutions of Puerto Rico whereby Doral was required to increase capital or submit a contingency plan for a sale, merger or liquidation of Doral by July 7 of this year.
On June 12 of this year the FDIC sent a letter to Doral telling it was in the "undercapitalized" capital category under the Federal Deposit Insurance Act. The FDIC directed Doral to file a written capital restoration plan with the FDIC within 45 days of receiving the letter.
According to an 8-K statement filed with the United States Securities and Exchange Commission on Wednesday, in the Sept. 26 letter the FDIC said that it had not received the promised restoration or contingency plans and that both must be "submitted immediately."
Doral Bank's parent, Doral Financial Corp. has more than $150 million in municipal notes and bonds. Both Moody's Investors Service and Standard & Poor's have given the bank ratings deep in speculative territory.
Since Doral isn't one of the biggest Puerto Rico banks, its collapse wouldn't have a big impact, said Vicente Feliciano, president of Advantage Business Consulting, in May; still, "it's not to be taken lightly," he said.
The collapse of three Puerto Rico banks in April 2010 was more significant, Feliciano said. The FDIC made sure all deposits were honored and not just the first $250,000, he said, and it would probably do the same for Doral's depositors.
