Guaranty Bank has been closed down making it the third largest bank to fail in the year 2009. Till now, 81 banks have failed in the year 2009. The Federal Deposit Insurance Corporation, FDIC, will receive the 13 billion dollar assets and 12 billion dollar deposits of Guaranty Bank. The bank had 162 branches in Texas and California.

Guaranty also is the 11th largest bank to fail in United States. It shares this spot with First City Bancorporation which failed in 1988. FDIC will have to bear a 3 billion dollar cost due to the failure of Guaranty Bank. Though many bid for the assets of the bankrupt bank, including a private equity group led by Gerald Ford, BBVA Compass, a U.S. subsidiary of Spanish bank Banco Bilbao Vizcaya Argentaria, was the winner.

According to Jose Maria Garcia Meyer, chairman of BBVA Compass, this whole transaction made a lot of sense from a strategic point of view. This whole transaction is also important as this is the first time that a foreign bank has bought a failed U.S. bank.This bank failure is the fourth bank failure in Texas this year. It seems U.S. economy is still struggling and recession is still at large.