Bank of America, PNC raise equity post-stress tests

Pedestrians walk past a Bank of America branch in New York May 8, 2009.

NEW YORK (Reuters) - Bank of America Corp (BAC.N) and PNC Financial Services Group Inc (PNC.N) said on Wednesday that they have taken big steps toward plugging capital shortfalls identified by U.S. 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. Regulators ordered Bank of America to raise $33.9 billion and PNC $600 million.

Bank of America, the nation's largest bank, said it raised $5.9 billion by swapping 436 million common shares for preferred stock. It said it might issue another 564 million common shares from such swaps.

The Charlotte, North Carolina-based bank said it has raised close to $26 billion of equity capital this month, including sales of $13.47 billion of common stock and part of its stake in China Construction Bank Corp (601939.SS).

It may also sell its First Republic Bank and Columbia Management Group asset management units, or pursue joint ventures. The amount raised from common stock sales and conversions exceeds Bank of America's original $17 billion target.

PNC, the seventh-largest bank, said it plugged its capital shortfall by raising more than $600 million through a sale of 15 million common shares in an "at-the-market" offering.

The Pittsburgh-based lender said it planned "as soon as appropriate" to pay back the $7.6 billion it took from the Treasury Department's Troubled Asset Relief Program.

KeyCorp (KEY.N), a Cleveland-based lender found to have a $1.8 billion shortfall, on Wednesday said it may swap common shares for up to $1.74 billion of preferred securities. It earlier announced plans to sell $750 million of common stock.

Many banks have maligned TARP for its restrictions, including executive pay rules, and because investors view participation as a sign of weakness. Bank of America took $45 billion from TARP, and KeyCorp $2.5 billion.

Jamie Dimon, JPMorgan Chase & Co's (JPM.N) chief executive, said reasons to block healthy banks from repaying TARP "have virtually disappeared," given the "enormous" federal stimuli to markets, and banks' ability to raise capital on their own.

"We're hoping that the banks who can are allowed to repay TARP as soon as possible, which we would like to do," Dimon said at a Sanford C. Bernstein & Co conference.

JPMorgan took $25 billion from TARP, and was found under its stress test to have no capital shortfall. The 10 banks ordered to raise capital have until June 8 to develop capital plans. Nine other banks were found to have enough capital.

In afternoon trading, Bank of America shares were up 4.6 percent to $11.49; PNC was up 1.3 percent to $43.79; KeyCorp fell 4.8 percent to $4.95; and JPMorgan rose 0.3 percent to $36.65.

(Reporting by Jonathan Stempel; Editing by Derek Caney, Lisa Von Ahn, Tim Dobbyn)