Several large U.S. banks undertook big capital-raising efforts on Tuesday, hoping to satisfy regulators who want to see bigger cushions against a deep recession, or proof they have enough of a buffer already.
Bank of America Corp
Meanwhile, U.S. Bancorp
Unlike Bank of America, both were deemed in U.S. government stress tests to have sufficient capital buffers. BB&T Corp
Dozens of lenders are hoping to convince regulators they can withstand a steep economic downturn, or are ready to repay money from the $700 billion Troubled Asset Relief Program.
TARP was designed to spur lending, but banks now consider it a burden because it imposes too many restrictions, including on pay, and suggests that recipients are weak.
Bank of America took $45 billion from TARP, U.S. Bancorp $6.6 billion, BB&T $3.1 billion and Bank of New York Mellon $3 billion. Lenders say it is up to regulators to decide when money can be repaid. The government does not want banks to repay funds, only to find later that they need more.
It is now a negative to have TARP, Bank of New York Mellon Chief Executive Robert Kelly said at a UBS financial services conference. When I was traveling in the Middle East, Asia and in Europe over the past couple of months... I got a pretty clear message that it would differentiate us if we were able to get out.
Bank of America last week said it plans to plug roughly half its $33.9 billion capital shortfall by issuing new common stock, and the rest through asset sales and other means.
The bank sold a little more than one-third of its roughly 16.7 percent CCB stake to investors including Singapore's state-run Temasek Holdings
Bank of America owns other CCB shares it cannot sell before August 29, 2011. Chief Executive Kenneth Lewis said on Monday we always want to have a very large ownership position.
Separately, U.S. Bancorp's $2.5 billion stock sale comprised 139 million shares at $18 each. Bank of New York Mellon's $1.2 billion sale, 20 percent larger than expected, comprised 42 million shares at $28.75 each.
The shares priced at 3 percent discounts to Monday closing prices, which is normal for secondary stock offerings.
Wells Fargo & Co
In afternoon trading, Bank of America shares were down 5.4 percent at $12.24, U.S. Bancorp fell 6.1 percent to $17.37, Bank of New York Mellon fell 4.2 percent to $28.31, and BB&T fell 6.1 percent to $22.85.
(Reporting by Jonathan Stempel; Editing by Tim Dobbyn)