Out of the Gate: KeyCorp shares slide

The stock lost 32 cents, or 2.7 percent, to $11.66. Just after the opening bell, shares touched a 52-week low of $11.63.

The capital raise is meant to offset an after-tax charge of about $1.1 billion to $1.2 billion related to a federal court decision involving the tax treatment of part of its leveraged lease portfolio.

BMO Capital Markets analyst Peter Winter kept a "Market Perform" rating but lowered his price target to $14 from $20. The new target implies he expects shares to rise 17 percent over Thursday's $11.98 close.

"We have concerns that KeyCorp might have to return to the market for additional capital if the economy and housing continues to worsen," Winter said in a note to clients.

Company spokesman Bill Murschel said, however, that "at this juncture, I don't see any need to approach the capital markets again."

The company had initially planned to raise about $1.5 billion but found that its stock offerings were oversubscribed, pushing the amount raised up to the $1.65 billion.

That extra money will be used as needed in the court case and for "general corporate purposes," he said.

"The good news is we have a strong and fortified capital position going forward in markets that are likely to be the same or more difficult in the weeks ahead," Murschel said.