Venezuelan family’s takeover bid of troubled Miami bank may be on the rocks

Brickell Bank is headquartered in the 36-story office tower formerly known as Espirito Santo Plaza, now called Brickell Arch.
Brickell Bank is headquartered in the 36-story office tower formerly known as Espirito Santo Plaza, now called Brickell Arch. Miami Herald

Venezuela’s wealthy Benacerraf family has allowed a $10 million agreement to buy Miami’s Brickell Bank to expire, potentially snatching away a lifeline for the struggling financial institution.

The agreement between the family, which owns Caracas-based 100% Banco, and Brickell Bank’s Portugal-based parent company expired at the end of the year, bank officials confirmed.

“The agreement between the Benacerrafs and the shareholder in Portugal expired at the end of 2016 and the Benacerraf family chose not to renew that,” G. Frederick Reinhardt, Brickell Bank chairman and CEO, said in a statement.

But Reinhardt said he still expects the sale to happen.

The deal was widely expected to sail through with the blessing of federal regulators, and had already received a thumbs-up from state officials. If the sale fails, the small community bank — part of the rubble left over from the collapse of Portugal’s Espírito Santo group — would be in desperate need of another buyer.

$10 millionAgreed sale price of Brickell Bank

In 2014, the Federal Deposit Insurance Corporation ordered the Miami bank to find new owners as its parent company imploded amid allegations of fraud. Brickell Bank has also dealt with regulatory issues over its anti-money laundering policies.

Despite the setback, Alcides Avila, a Miami lawyer representing the Benacerraf family, said the deal will go forward. He said the family’s application to buy the bank is still being considered by the FDIC.

“The application has not been withdrawn,” Avila said. “It is still being processed. ... Unfortunately when you’re dealing with foreign buyers, from the perspective of regulators there’s a lot of information they require. They requested information. We provided it. They’re reviewing it.”

Asked if the expiration of the agreement could put pressure on federal regulators to green-light the sale, Avila said: “It couldn’t hurt.”

(Avila also worked on the $882.8 million sale of Miami-based City National Bank of Florida to a Chilean group, a deal that took more than two years to close.)

In June 2015, members of the Benacerraf family, along with another wealthy investor, submitted applications to federal and state regulators to buy Brickell Bank. The new owners said they did not plan to liquidate, sell or merge the bank with another company. Family patriarch Salomón Henry Benacerraf, a former chairman of Visa International, would have become chairman, with Fortunato Benacerraf Saias and Sadia Cohen Zrihen appointed to the board.

The Florida Office of Financial Regulation approved the application in May, according to state records. It said the new owners passed background checks, had clean records with Venezuelan regulators and did not intend to make significant changes to the bank’s management.

The interests of the other stockholders and the depositors and creditors of the Bank ... will not be jeopardized by the proposed change in ownership.

Florida Office of Financial Regulation

“The interests of the other stockholders and the depositors and creditors of the Bank, and the interests of the public generally, will not be jeopardized by the proposed change in ownership,” a state official wrote in a May 18 order approving the sale.

The Benacerraf clan has been involved in Venezuela’s banking industry since the 1940s, according to local media reports. Cohen is a Venezuelan-born investor who left for Spain after the election of Hugo Chávez. Most of the funds would have come from the Benacerrafs, who sold off some of their interests in Venezuelan financial institutions, according to the state order.

A spokesman for the FDIC did not respond to a request for comment by deadline.

Financial troubles

Brickell Bank (known as Espírito Santo Bank until a rebranding in 2015) has shed assets and employees since the Portuguese government was forced to bail out its bankrupt parent company three years ago.

As of the third quarter of 2016, Brickell Bank had 88 employees and $503.5 million in assets, compared to 127 employees and $751.3 million in assets in the summer of 2014, according to federal records. Over the same period, its deposits have shrunk from $646.2 million to $380.5 million.

Through the first three quarters of 2016, the bank has lost $4.9 million, although that’s better than the $9.5 million loss recorded in the first three quarters of 2015. Private ratings firm Bauer Financial gives the bank two out of five stars, meaning it is considered “problematic.”

It caters mainly to wealthy Latin American businesspeople living and working in South Florida.

If you go back before the problems in Portugal started, the bank was making money and doing well.

Ken Thomas, banking consultant

“If you go back before the problems in Portugal started, the bank was making money and doing well,” said Ken Thomas, a local banking consultant. “They fulfill an important function in financing a lot of the [luxury] condos that are sold.”

Thomas said that while alarm bells might be ringing down Brickell Avenue about the bank going under, he believes an improving economic climate for banks could attract other suitors besides the Benacerrafs.

Since the election of Donald Trump, bank stocks have soared, with JPMorgan Chase and other large- and mid-sized banks hitting record highs. Trump has promised to dismantle the Dodd-Frank Act, which placed new regulations on the banking industry in 2010. Interest rates are also rising. Even scandal-plagued Wells Fargo has seen a bump in its share price.

“For years, people were saying U.S. Century Bank would go under, but they survived and are growing again,” said Thomas, pointing to the resurgence of the Doral-based bank that long struggled with low capital levels.

Brickell Bank has had other regulatory issues in the past.

In February, it paid $1 million to settle charges that it violated federal anti-money laundering rules. The bank said it discovered the weaknesses in its compliance policies on its own and voluntarily disclosed them to regulators.

Its sole branch is located in the Brickell office tower once known as the Espirito Santo Plaza but renamed Brickell Arch after a $142 million sale last year. The proceeds went to Espírito Santo’s creditors.

Nicholas Nehamas: 305-376-3745, @NickNehamas