Regions Financial Corp
Regions, a Birmingham, Alabama lender operating mainly in the southeast, said it will sell $1 billion of common stock and $250 million of preferred shares convertible into common stocks. It also proposed to exchange up to 138 million common shares for other preferred securities.
Fifth Third, a Cincinnati lender operating in the midwest and southeast, said it plans to sell $750 million of common stock and proposed to exchange common stock and cash for existing convertible preferred shares.
The banks were among the 19 to undergo government stress tests to gauge their ability to weather a deep recession. Ten were told to raise a combined $74.6 billion.
Regulators ordered Regions to raise $2.5 billion and Fifth Third $1.1 billion. Fifth Third said it may raise more and may use some proceeds to start repaying the $3.4 billion it took from the government's Troubled Asset Relief Program. Regions took $3.5 billion of TARP money.
Among the 10 companies ordered to raise capital, only auto and mortgage finance company GMAC LLC
The Treasury Department is preparing to inject more than $7 billion into GMAC, which could leave the government with a majority stake, the Detroit News and Wall Street Journal said on Wednesday. Treasury declined to comment. GMAC was unavailable for comment.
Other lenders that have announced steps to bolster capital in light of the stress tests are Bank of America Corp
Regions shares closed down 35 cents at $4.89 on the New York Stock Exchange. Fifth Third closed down 10 cents at $7.71 on the Nasdaq.
(Reporting by Jonathan Stempel; Editing by Andre Grenon)