UPDATE 2-W Holding hires advisers; FDIC takeover seen

* Says may need to seek bankruptcy protection

* Says hires advisers to explore options

* Analysts see an imminent FDIC takeover

* Stock falls as much as 16 pct
(Recasts, adds details, analyst comments; updates stock move)

By Anurag Kotoky

BANGALORE, April 26 (BestGrowthStock) – W Holding Co Inc (WHI.N: ), a
Puerto Rican bank already under the scrutiny of regulators,
hired advisers to assist in raising additional capital and
exploring other strategic alternatives.

U.S. regulators may put the company’s lending unit into
receivership and in such a case, it was “highly likely” that
the company would be required to cease operations or seek
bankruptcy protection, W Holding said.

Analysts said a takeover by regulator could be imminent for
the company.

W Holding said it needs significant sources of capital to
continue operations through 2010 and beyond.

“It appears that time is growing short (for W Holding),” B.
Riley & Co analyst Joe Gladue said.

The troubled lender also said its Chairman and Chief
Executive Frank Stipes will step down as the CEO of its main
banking unit Westernbank Puerto Rico to devote more time to the
capital-raising efforts.

W Holding shares dropped as much as 16 percent to $7.02
Monday on the New York Stock Exchange. They traded as high as
$27.61 May last year.

“It is way too late. If they could raise capital, they
would have done that by now,” a Wall Street analyst, who did
not wish to be identified, told Reuters. The analyst does not
cover the company.

W Holding did not reply to an email seeking comments.

W Holding is operating under a consent order with the
Federal Deposit Insurance Corp (FDIC) and the Office of the
Commissioner of Financial Institutions of Puerto Rico, which
impose certain restrictions on dividends and credit extension.

“If a receivership were to occur, the bank’s assets would
likely be liquidated, including a sale of such assets to
another institution,” the company said.

Puerto Rican banks are likely to see a round of
consolidation soon as regulators move to close underperforming
lenders, and relatively stable banks like Popular Inc (BPOP.O: )
and Doral Financial Corp (DRL.N: ) have raised cash recently to
go for lucrative FDIC-backed deals. [ID:nSGE6340GZ]

Popular, Doral and Oriental Financial Group Inc (OFG.N: )
have already raised capital to cash in on bank failures, and
First BanCorp (FBP.N: ) is also expected to raise capital this

Apart from W Holding, EuroBancshares Inc (EUBK.O: ) and R&G
Financial Corp (RGFC.PK: ) are the other Puerto Rican banks under
regulatory pressure, and are likely to be closed by regulators.

FDIC generally closes undercapitalized banks in a bid to
protect deposits, and follows a formal sale process of assets
and deposits.

FDIC-assisted deals have turned very lucrative since last
year with rising bank failures. These deals often add to
earnings immediately and include a loss-sharing agreement with
the regulators.

“We believe that both Doral and Popular would have an
interest in W Holding if it were to become available. If it is
no longer on the market, the competition for other
FDIC-assisted deals would be that much tougher,” B. Riley’s
Gladue said in an email.

Investing Tools

(Reporting by Anurag Kotoky; Editing by Vinu Pilakkott and
Gopakumar Warrier)

UPDATE 2-W Holding hires advisers; FDIC takeover seen