Private Equity To The Banking Rescue?

The Economist recently pointed out how private equity is gearing up for some serious financial sector investing, saying that 60 private equity funds that focus on financial services were set up in 2008 and 114 are in the works.

One key reason for the trend is that non-banking firms previously could not own significant stakes in banks. It’s evolved quickly: the ownership cap was 9.9% then it was 24.9%, and now it’s as much as one-third. Private equity helped Indymac and it’s likely to be a big source of change in the mortgage and banking industry in 2009.