Colonial BancGroup Inc. said it has been slapped with a cease-and-desist order from regulators.
Colonial said in a regulatory filing that the Federal Reserve and the Alabama State Banking Department issued the order, effective July 22. The notification comes two months after the $26 billion-asset Montgomery, Ala., company disclosed that unit Colonial Bank had been hit with a similar order, which requires the company to submit a written plans for building capital and liquidity.
Colonial has been facing a possible capital crunch after significant credit deterioration in Florida, where more than half of its assets are located.
In March, Colonial said it has agreed to sell a majority stake in itself to investors led by Taylor, Bean & Whitaker Mortgage Corp. for $300 million, a condition for the bank to get more than $500 million in capital from the Troubled Asset Relief Program. That deal is still waiting approval from regulators.
