Bank of America Corp
The Charlotte, North Carolina-based lender said it had sent the U.S. Treasury a mix of cash from its corporate coffers and money raised as part of a $19.29 billion securities offering earlier this week to settle the outstanding Troubled Asset Relief Program, or TARP, investment.
Bank of America, the largest U.S. bank by assets, estimated that after repaying the taxpayer funds, its Tier 1 Common Capital ratio -- a metric used by investors and regulators to measure a bank's health -- improved to about 8.4 percent from 7.3 percent as of September 30.
The repayment also comes amid reports Citigroup Inc
The U.S. Treasury said late Wednesday it had received Bank of America's payment and the total amount of TARP funds repaid so far totaled $116 billion. The Treasury forecast total repayment could reached $175 billion by the end of 2010.
Investors and analysts said Bank of America's move removes a stumbling block from the on-going search to replace retiring Chief Executive Kenneth Lewis, now entering its third month.
They've got to do something and without the pay czar in the picture now, I think we'll see something soon, said Anton Schutz, president of Mendon Capital Advisors, referring to the CEO search.
Mendon Capital owns Bank of America shares.
Bank of America was the lone vocal critic of the U.S. pay czar Kenneth Feinberg's initial compensation rules in October, when he curbed pay at seven U.S. companies that received so- called extraordinary government assistance.
In a prepared statement, Chief Executive Ken Lewis said the company cleared a key hurdle in demonstrating the economy's broader health.
A company spokesman declined further comment.
Lewis said has publicly stated throughout the year that repaying TARP was a top priority before he retired. He is slated to retire on December 31.
The bank first announced an agreement with the U.S. Treasury to repay TARP on December 2.
The company originally received the government aid in two payments, an initial $25 billion in the fall of 2008 at the height of the financial crisis and another $20 billion in January 2009 as part of the deal to purchase Merrill Lynch & Co.
But analysts cautioned the short-term benefit of easing the way for a new CEO would not remove the bank from longer-term scrutiny.
Each of these companies would have been a zero if it wasn't for the government involvement, so I think that's going to be there for a long time, said Keith Davis, an analyst at Farr, Miller & Washington in Washington D.C.
(Reporting by Joe Rauch and Elinor Comlay; editing by Gerald E. McCormick, Leslie Gevirtz and Andre Grenon)