In 1988, Warburg Pincus was the lead investor in the $1 billion restructuring of Mellon Bank (Mellon) following Mellon’s significant losses during the U.S. savings and loan crisis. Mellon was a multi-bank holding company with subsidiaries that engaged in retail and commercial banking, trust banking, investment management, and other financial services in the U.S. and abroad. Warburg Pincus’ investment helped facilitate one of the first non-government assisted recapitalizations of a major commercial bank. Warburg Pincus devised an innovative recapitalization plan implementing one of the first so-called “good bank, bad bank” asset restructuring strategies where Mellon transferred its lower quality assets to a newly formed independent liquidating national bank. Over the course of its investment, Warburg Pincus supported management in transforming Mellon from a regional commercial bank into one of the U.S.’s largest, fee-based (asset management and processing) financial services institutions. Warburg Pincus supported Mellon as an investor for nine years and fully exited its position in 1998.
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