Latest big bank to shut down hits US

US BANK Colonial BancGroup, which has assets of $25bn (&pound;15.1bn), became the largest American bank to fail so far this year when it was shut down by federal officials on Friday.<br /><br />On the same day, regulators also shut down two institutions in Arizona &ndash; one in Las Vegas and one in Pittsburgh &ndash;&nbsp;pushing the total number of failed US banks for 2009 to 77.<br /><br />The Federal Deposit Insurance Corporation (FDIC), which was appointed receiver to the bank, has approved the sale of Colonial&rsquo;s $20bn of deposits, and around $22bn of its assets, to the US&rsquo;s 10th largest financial holding company, BB&amp;T. <br /><br />The FDIC will dispose of the remainder of Colonial&rsquo;s assets at a later date, it said. The regulator said it had signed a loss-sharing agreement with BB&amp;T on around $15bn of assets.<br /><br />The collapse will cost the FDIC&rsquo;s deposit insurance fund around $2.8bn. After the takeover, BB&amp;T will be America&rsquo;s ninth-biggest bank by assets, <br />Colonial warned last month it substantially doubted it would be able to survive. And earlier this month it said there was a criminal probe into part of its mortgage-lending business.<br /><br />Colonial is the sixth biggest US bank to fail. <br /><br />The downturn has seen a spurt in the collapse of financial institutions, with regulators shutting down banks at their fastest pace in 17 years, according to the FDIC.<br /><br />Last September during the height of the world financial meltdown, Seattle-based Washington Mutual &ndash; WaMu &ndash; was seized; it was the biggest bank failure in US history. Branches and assets of the group were later sold off to rival JPMorgan Chase.