Four big U.S. banks on Monday announced large common stock offerings and said they would use proceeds to repay funds received under the government's bank bailout program.
BB&T also reduced its quarterly dividend 68 percent to 15 cents per share from 47 cents, saving $725 million a year, following 37 straight years of dividend increases.
The roughly $6.5 billion of stock offerings were announced three days after Wells Fargo & Co
The banks were among the 19 lenders to undergo government stress tests of their ability to weather a deep economic downturn.
U.S. Bancorp, Capital One and BB&T were among the nine found not to need more capital, while KeyCorp was ordered to raise $1.8 billion. KeyCorp said it may conduct other transactions that result in more common stock issuance. Wells Fargo and Morgan Stanley were also told to find new capital.
In premarket trading, shares of U.S. Bancorp fell 5 percent, Capital One 8.1 percent, BB&T 3.2 percent and KeyCorp 0.9 percent.
U.S. Bancorp took $6.6 billion from the government's Troubled Asset Relief Program, while Capital One took $3.55 billion, BB&T $3.1 billion and KeyCorp $2.5 billion.
Hundreds of lenders took money from TARP, which was designed to spur lending and improve the economy.
Yet many now view TARP as an albatross that imposes too many restrictions, including on executive pay, and suggests that recipients are desperate for capital.
Rational, objective lending is one of the most important purposes of the banking system, and when you inject Congress and the administration into it, it effectively politicizes the process, which is not healthy, BB&T Chief Executive Kelly King said in an interview on Monday.
King also said the stress tests unnecessarily created huge levels of anxiety and concern among investors. Regulators have always had the ability to assess the capital of institutions, and require more if they chose, he said.
U.S. Bancorp is based in Minneapolis; Capital One in McLean, Virginia; BB&T in Winston-Salem, North Carolina, and KeyCorp in Cleveland.
Goldman Sachs & Co and Morgan Stanley are arranging the U.S. Bancorp offerings. Barclays Capital is arranging the Capital One offering. Goldman Sachs, JPMorgan and Morgan Stanley are arranging the BB&T offering. Morgan Stanley is arranging the KeyCorp offering.
In Friday trading, U.S. Bancorp shares closed at $20.54, Capital One at $31.34, BB&T at $26.33 and KeyCorp at $6.97, Reuters data show.
(Reporting by Jonathan Stempel; editing by John Wallace and Brian Moss)