Big Regions Financial Corp. shareholder dumps half its shares

At the same time as Regions Financial Corp. races to complete a deal to sell its Memphis-based investment banking unit, one of the Alabama-based bank’s largest shareholders has dumped almost half its shares.

Fairholme Capital Management LLC held a little more than 60 million Regions shares as of Sept. 30, according to a filing with the U.S. Securities and Exchange Commission this week. That’s down from more than 115 million shares as of May 31, according to the firm’s semi-annual report for the six months ended May 31.

According to the Bloomberg news service, Fairholme had been ranked the biggest holder of Regions shares as of June 30.

Regions’ stock price has slid almost 50 percent this year. Complicating the uncertain outlook at the moment for Regions – which is the number 2 bank as ranked by customer deposit share in Memphis – is the lack of a deal more than three months after announcing the sale of its investment banking arm, Morgan Keegan & Co. Inc.

A few reports this week, including one from the Financial Times, said that at least three potential buyers are still in the hunt for the Memphis unit. Private equity firms Blackstone Group and Carlyle Group, of New York and Washington D.C., respectively, have reportedly teamed up and are competing with Thomas H. Lee Partners of Boston.

They’re in the process of carrying out due diligence on Morgan Keegan, according to the Financial Times.

Some people with knowledge of the process, though, say it’s still unclear whether a deal will get done.

“I would not be surprised if Regions decides to hold on to Morgan Keegan for a while, because they do not have to repay the TARP money back this year, and they are trying to sell the company in a down market,” said Ron Edde, of Armstrong Financial Group Inc.

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