Author: By Stephen Foley in New York
Three banks which had been given a clean bill of health by the Treasury
department, and were therefore not required to raise fresh capital,
nonetheless tapped the stock market for new money yesterday morning and said
they would repay money taken last year from government?s Wall Street bailout
The biggest fundraising was conducted by US Bancorp, which sold $2.5bn in
stock and also issued a further $1bn in new debt. Capital One raised $1.55bn
in new equity and North Carolina-based BB&T Corp unveiled plans to raise
BB&T?s chief executive, Kelly King, said that he planned to use the money to
repay the $3.1bn the bank took last year from the Treasury?s Troubled-Asset
Relief Program (Tarp). The Tarp was established when the financial crisis
was at its height and designed to restore stability to the US banking
system, but executives have since complained that it imposes too many
restrictions on their business.
“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 politicises the process, which is not healthy,” Mr King said.
Yesterday?s fundraising moves followed a combined $12.6bn in stock sales last
week by Morgan Stanley and Wells Fargo, two of the biggest banks in the
country, both of which were told to shore up their balance sheets following
the government?s stress test results.
Meanwhile, Bank of America, the bank with the biggest shortfall after the
tests, is believed to be shopping round one-third of its 17 per cent stake
in China Construction Bank, which it will be allowed to sell from this
Thursday. The sale could net more than $8bn, going some way towards the
$33.9bn capital raising target set by the Treasury.
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