NAB rescues TierOne depositors

National Australia Bank rescued the customers of a US banking tiddler at the end of last week. Through Great Western Bank, NAB took control of TierOne Bank, which trades in the US states of Nebraska, Iowa and Kansas.

US bank regulators seized TierOne on Friday. The failure of TierOne is the eighty-first failure of a bank in the United States this year, according to the blog Calculated Risk.

The Federal Deposit Insurance Corp said Great Western will pay the FDIC a premium of 1.5 per cent to assume all of the deposits of TierOne Bank. In addition to assuming all of the deposits of the failed bank, Great Western Bank agreed to purchase essentially all of the assets, the FDIC said.

As of March 2010, TierOne Bank had approximately US$2.8 billion in total assets and US$2.2 billion in total deposits.

Great Western said the agreement covered TierOne's US$1.9 billion in loans, of which US$1.7 billion is covered under a loss share agreement that will see the FDIC absorb 80 per cent of any credit losses.