Doral Financial (DRL) in San Juan, Puerto Rico, is developing a revised capital plan to address concerns from the Federal Deposit Insurance Corp.
The FDIC recently issued a ruling that bars the $8.5 billion-asset company from including tax receivables from the Puerto Rican government in its Tier 1 capital calculation. As part of the ruling, Doral will not meet capital requirements agreed upon in an FDIC consent order made two years earlier.
Puerto Rico tax receivables accounted for $289 million of Doral's $679 million Tier 1 capital as of Dec. 31.
Doral said it could sell certain assets performing and nonperforming and businesses to meet the FDIC's requirements.
Under terms of the consent order, Doral's bank is not allowed to accept, renew, or roll over any brokered deposits unless it has been granted a waiver by the FDIC. But the FDIC does not plan to issue a waiver to accept brokered deposits until Doral provides revised capital calculations.
Brokered deposits made up roughly 18% of Doral's total funding, according to a regulatory filing.
"We have been developing and evaluating alternative strategic initiatives to respond to significant trends affecting the company, including the adverse effects on our business from the continued economic problems in Puerto Rico as well as our success in building a U.S.-based business," Glen Wakeman, Doral's chief executive, said in a press release.
"In the meantime, we believe Doral has adequate liquidity to finance its operations as we work through this process," Wakeman said. "Doral will be meeting with its regulators to address and to seek to mutually resolve the outstanding issues while preserving its appeal rights as appropriate."