bank rates

Virtual Bank Seized, Keeps Good CD Rates

The bank's assets were sold to Sabadell United Bank of MiamiA warning to depositors at Virtual Bank: Your bank’s assets have been seized and sold.

Federal regulators swooped in last week and took over Lydian Private Bank of Palm Beach, Fla., which owned Virtual Bank. The feds then sold the assets to Sabadell United Bank of Miami.


A seizure in and of itself isn’t necessarily huge news.

That’s because it’s happened nearly 70 times in 2011. And customers often have little to worry about — their FDIC-insured savings are safe.

But Virtual Bank often offered good nationally available CD rates, and we worry the new owners could cut those rates.

The bank has ranked near the top in short-term CD rates for much of 2011, and has been the subject of posts here at Bankaholic since 2006.

On the day regulators took over the bank, it offered in several terms CD rates just below what you’ll find on our CD Rates Leaderboard.

Sabadell isn’t obligated to honor the CD rates customers were promised by Virtual Bank.

It could slash rates going forward on certificates of deposit customers already purchased. Of course, those same customers can walk away penalty-free with their full principal plus any interest accrued to date.

But as of this morning, Sabadell was still offering competitive interest rates through Virtual Bank (www.virtualbank.com), rates which the new owner must honor.

With a $10,000 minimum deposit, Virtual Bank pays:

  • 0.75% APY on 3-month CDs.
  • 1.01% APY on 6-month CDs.
  • 1.16% APY on 12-month CDs.
  • 1.41% APY on 24-month CDs.

Those rates all fall slightly below the top spots on our CD Rates Leaderboard, but remain among the best nationally available certificates of deposit.

Sabadell United Bank (www.sabedellunited.com) is a division of Banco Sabadell, Spain’s fourth-largest banking group. Including the Lydian Private Bank branches, Sabadell now has 25 locations in six Florida counties.

Sabadell United Bank carries four (out of five) stars on Bankrate.com’s Safe & Sound rating system. Lydian was a one-star bank at the time of its seizure.

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Comments (2)
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  1. SeniorSaver said:
    on August 23rd at 11:28 am

    Hopefully, Sabadell will do what US Bank did with Downey, BofA with Countrywide and Wells Fargo with Wachovia in 2008–keep favorable rates in effect to keep exisiting customers from bolting and to attract new depositors. I think that big Spanish bank whose name begins with a V also did this when it acquired Guaranty Bank. There were some good CD deals back then at the “failed” institutions.

  2. Mike Cetera said:
    on August 30th at 11:03 am

    Virtual Bank has cut some of its CD rates, including the 24-month rate mentioned above. It now pays 1.31% APY.