The prospective buyers, which include private equity investor JC Flowers and hedge funds Dune Capital and Paulson & Company, are hammering out final terms with the Federal Deposit Insurance Corporation, which seized the bank in July. The deal could be announced by the new year.

The proposed deal would be one of the first to make use of new regulatory flexibility to allow private equity and hedge funds to acquire bank holding companies without becoming subject to additional regulation. In September, the Federal Reserve relaxed rules that required private equity firms to register as bank holding companies if they acquired more than 24.9 per cent of a bank.

The consortium is negotiating to buy the entire bank, including its 33 branches, reverse mortgage unit and its $176bn loan-servicing portfolio, said people close to the situation.