Troubled lender CIT Group Inc
CIT, which is trying to restructure and avoid bankruptcy, agreed on Wednesday to submit a plan to the Federal Reserve Bank of New York outlining how it will maintain sufficient capital at its Utah-based bank and the bank holding company.
The 101-year-old lender to small and medium-sized companies also promised to provide the regulator with a plan to improve management of its liquidity position within 15 days, according to details in the Federal Reserve enforcement notice.
The company will provide a credit risk management plan and review its system of setting aside allowances for loan and lease losses within 60 days, according to New York Fed.
Within 75 days, CIT also must submit a business plan to improve its financial condition and outline actions to strengthen its management and corporate governance.
Separately, New York-based CIT said its board of directors has adopted a tax plan to protect CIT's ability to use its net operating losses and other tax assets.
The Tax Benefits Preservation Plan will discourage people or groups from becoming 5 percent shareholders, something that CIT said could reduce the value of the tax assets.
CIT last month secured $3 billion in emergency funding from bondholders and it is in the process of a tender offer for $1 billion of notes due August 17.
The lender has suffered amid the global recession from mounting loan losses, after it expanded its traditional business and made an ill-timed foray into sub-prime mortgages.
Shares in CIT were up about 15 percent at $1.47 in morning trading on the New York Stock Exchange after trading as high as $1.50. CIT shares have fallen more than 65 percent since the start of the year.
(Reporting by Elinor Comlay, editing by Gerald E. McCormick and Robert MacMillan)