Bank of America raises $13.47 billion in share sale
NEW YORK (Reuters) - Bank of America Corp raised $13.47 billion through a share sale, marking a major step toward meeting the U.S. government's requirements for capital-raising following the recent "stress testing" of the bank.
Including proceeds from the sale of part of its stake in China Construction Bank Corp for $7.3 billion, the bank is now more than half-way toward plugging a $33.9 billion capital shortfall identified by the government.
The bank has issued 1.25 billion shares at an average price of $10.77 each since last Friday, it said in a statement late on Tuesday. Earlier in the day, a source familiar with the transaction said the bank had sold 800 million shares at $10 each on Tuesday alone.
The average price of $10.77 is 4.3 percent below Tuesday's closing price of $11.25. Bank of America shares rose two cents in after-hours trade to $11.27.
The offering by Bank of America comes on the heels of smaller share issuances by other banks ordered to raise capital. This includes offerings of $8.6 billion by Wells Fargo & Co and $4 billion by Morgan Stanley.
As part of Bank of America's stock sale, which brought in gross proceeds of about $13.47 billion, the bank sold 800 million shares at $10 each on Tuesday alone, a person familiar with the transaction earlier told Reuters.
The person was not authorized to speak because terms of the sale are not public.
"We're pleased to have this portion of our capital plan completed," Chief Financial Officer Joe Price said in a statement. "This strengthens and diversifies our capital structure."
Regulators told Chief Executive Kenneth Lewis the bank needed to bolster its finances following a government "stress test" of its ability to handle a deep recession.
Ten of the 19 large U.S. banks that underwent such tests were told this month to raise capital, with Bank of America's $33.9 billion shortfall being by far the largest.
Several banks found to have no capital needs sold stock this month to position themselves to repay taxpayer money taken from the federal Troubled Asset Relief Program.
Bank of America has taken $45 billion of TARP money, including $20 billion in a bailout to help it absorb Merrill Lynch & Co, which it bought on January 1.
The Charlotte, North Carolina-based bank has said it hopes to repay its TARP money within the next couple of years, and in any event before Lewis retires. He has suggested he would like to retire by the time he turns 65, which would be in 2012.
The bank has said it plans to raise roughly $17 billion more from asset sales and other means. Last week, it sold part of its stake in China Construction Bank Corp for $7.3 billion.
NEW YORK - U.S. stock investors will start the week on edge as markets worldwide react to the referendum that appears to back Russia's claim to Ukraine's Crimean peninsula, even if the vote result is not internationally recognized.
LONDON - Lloyds Bank said it will grow its lending to small-and-medium enterprises (SMEs) by a further 1 billion pounds this year, seeing stronger growth prospects for smaller businesses as Britain's economic recovery takes hold.
BEIJING/HONG KONG - China reiterated its opposition on Thursday to a European Union plan to limit airline carbon dioxide emissions and called for talks to resolve the issue a day after its major airlines refused to pay any carbon costs under the new law.