PNC, KeyCorp issuing stock to fill capital needs

NEW YORK (Reuters) - PNC Financial Services Group Inc PNC.N and KeyCorp KEY.N, ordered last week by federal regulators to bolster capital, on Thursday set plans to issue more common stock.

PNC said it plans to sell as many as 15 million shares valued at up to $653 million. KeyCorp said holders of 1.14 million preferred shares agreed to swap them for 13.67 million common shares, equal to 2.6 percent of its outstanding stock.

The banks were among 10 large U.S. banks told to raise capital after undergoing government “stress tests” of their ability to handle a deep recession. Nine other banks that underwent the tests were found not to need more capital.

Regulators told Pittsburgh-based PNC to raise $600 million, and Cleveland-based KeyCorp to raise $1.8 billion. KeyCorp on Monday said it plans to address its shortfall in part by selling $750 million of stock.

PNC and KeyCorp disclosed their stock issuance plans in U.S. Securities and Exchange Commission filings.

In morning trading PNC shares fell 63 cents to $41.57, while KeyCorp rose 12 cents to $5.77.

Reporting by Jonathan Stempel; editing by John Wallace