(Adds FDIC statement)
NEW YORK/WASHINGTON, Feb 27 (Reuters) - Puerto Rico’s Doral Bank has failed and a local rival will take over its operations, authorities said on Friday after accidentally releasing the information early and sending shares down 46 percent before trading was halted.
It is the final twist in a yearlong saga for bank owner Doral Financial Corp, whose fortunes have mirrored the debt-laden island’s own troubles.
Doral was put under operating restrictions earlier this week after being told by the U.S. Federal Deposit Insurance Corp (FDIC) in January that a plan it submitted to restore its capital was not acceptable.
Doral has also been under pressure in a lengthy fight with the island about a $229 million tax refund. It lost an appeals court ruling this week to grant the lender the refund.
The FDIC announced on Friday that the bank had been closed and its banking operations and deposits will be taken over by Banco Popular de Puerto Rico, owned by Popular Inc, which will operate eight of Doral’s former branches and buy its remaining 18 locations from three banks.
As of the end of December, Doral had about $5.9 billion in total assets and $4.1 billion in total deposits.
The FDIC, which typically releases information about bank closures after 5 p.m. EST (2200 GMT) on Fridays, by mistake sent the release early, recalled it, then reissued it later.
The news caused shares of the bank to plunge 46.3 percent before trading was halted.
“We will review our process to avoid a repetition of this problem,” FDIC spokeswoman Barbara Hagenbaugh said in an email.
During the latter part of the financial crisis, the FDIC was known for its swift bank takeovers each Friday when its representatives would anonymously swoop onto a location ahead of a takeover.
“Sure they need to improve their internal controls, but I don’t see it as an indicator of a bigger problem,” said Mark Calabria, director of financial regulation studies at the Cato Institute.
Reporting by Megan Davies in New York, Douwe Miedema in Washington and a contributor in San Juan; Editing by Lisa Shumaker