Last Friday, Aug 19th, 2011 was a sad day in Palm Beach County Florida for Lydian Private Bank aka VirtualBank when it was closed by regulators. The banks assets were sold to Sabadell United located in Miami.
Lydian originally opened as a pure online bank in April, 2000 as VirtualBank during the Internet boom and was once a technology and service leader winning best online bank by Money Magazine.
The bank changed its name in 2002 to Lydian Bank and entered the private banking market in Florida with high service boutique style offices. While still maintaining the VirtualBank brand online the bank grew to over $2B in assets.
The failure will cost the FDIC about $293 million dollars. As of today (8/24), the VirtualBank web site has not changed and makes no mention of Sabadell yet however the Lydian website does display a notice.
Lydian of course is not alone, even innovator and leader online bank ING Direct voluntarily sold it's US business to Capital One earlier this year due to cash trouble with its parent company. It has been quite a year for online banking.
It is a sad situation for Palm Beach County with Lydian once employing over a 1000 employees and a bright future. The fall of the Lydian empire closes the story on what was once an online banking innovator and great company.
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