Bank of America Corp. and PNC Financial Services Group Inc. said Wednesday they had taken big steps toward plugging capital shortfalls identified by government regulators.
The companies are among 10 large U.S. banks told to raise $74.6 billion of capital, following government stress tests of their ability to handle a deep recession. Federal regulators this month ordered Bank of America to raise $33.9 billion, and PNC $600 million.
Bank of America, the largest U.S. bank, said it has raised about $5.9 billion of capital by swapping 436 million common shares for about $5.9 billion of preferred stock.
The Charlotte, N.C.-based bank said it has raised close to $26 billion of capital since the stress test, including previous sales of $13.47 billion of common stock and part of its stake in China Construction Bank Corp.
It again said that to raise more capital it may sell its First Republic Bank unit and its Columbia Management Group asset management unit, and pursue joint ventures.
PNC, the nation’s seventh-largest bank, said it raised more than $600 million of common equity by selling 15 million common shares in an "at-the-market" offering.
The Pittsburgh-based lender said it plans "as soon as appropriate" to pay back the $7.6 billion it took from the Treasury Department’s Troubled Asset Relief Program. Bank of America took $45 billion from TARP.
Many banks have maligned TARP for its restrictions, including executive pay rules, and because investors view participation as a sign of weakness.
KeyCorp, a Cleveland-based lender found to have a $1.8 billion shortfall, on Wednesday announced plans to exchange common shares for up to $1.74 billion of trust preferred securities. It previously said it would sell $750 million of common stock in an at-the-market offering.
The 10 banks ordered to raise capital have until June 8 to present plans for doing so to regulators. Nine other banks that underwent stress tests were found to have enough capital.
In Tuesday trading, Bank of America shares closed at $10.98, PNC at $43.25 and KeyCorp at $5.20. (Reuters)
