Several large US banks undertook big capital-raising efforts last night, hoping to satisfy regulators who want bigger cushions against a deep recession, or proof that they have enough of a buffer.
Bank of America, which regulators last week ordered to find $33.9 billion of capital, sold $7.3 billion of China Construction Bank Corp (CCB) shares to a group of investors, according to a person directly involved in the sale who was not authorized to discuss it. The bank declined to comment. CCB could not be reached.
Meanwhile, US Bancorp, BB&T Corp and Bank of New York Mellon sold a respective $2.5 billion, $1.5 billion and $1.2 billion of common stock, as they look to repay taxpayer bailout funds.
Unlike Bank of America, the three other US banks were deemed in federal "stress tests" to have sufficient capital buffers.
Dozens of lenders are hoping to convince regulators that they can withstand a steep economic downturn, or are healthy enough to repay money from the $700 billion Troubled Asset Relief Program.
TARP was designed to spur lending, but banks now consider it a burden because it imposes too many restrictions, including some on pay, and suggests that recipients are weak.
Bank of America took $45 billion from TARP, U.S. Bancorp $6.6 billion, BB&T $3.1 billion and Bank of New York Mellon $3 billion. Lenders say it is up to regulators to decide when money can be repaid. The government does not want banks to repay funds, only to find later that they need more.
"It is now a negative to have TARP," Bank of New York Mellon Chief Executive Robert Kelly said at a UBS financial services conference. "When I was traveling in the Middle East, Asia and in Europe over the past couple of months ... I got a pretty clear message (from clients) that it would differentiate us if we were able to get out."
Reuters