Expert: Paul Henneman - 6/21/2009

Question
If regulators take over  bank "A" and then it is bought by  bank "B", is the bank "A" stock worthless?

Answer
Michelle,
   Thank you for the question! Unfortunately this is a bit complex to fully answer here. But here is some brief information.
    There are many different ways for regulators to become actively involved in a bank. The government usually ends up holding stock as a result, the amount can vary widely. But other stock is still held by ordinary shareholders.  So when bank A is bought by bank B, the stock is  transferred to Bank B stock, usually at some sort of ration. The amount can vary widely, and depending upon the specifics of the deal this can be a good or bad thing for shareholders with stock in bank A.

I hope this helps a little, please do not hesitate to follow up with me regarding anything specific if I can be of more help.

Sincerely,
Paul Henneman
President
ValuEngine Inc
www.ValuEngine.com