3 banks to sell stock to repay bailout money
US Bancorp, Capital One and BB&T announce plans to raise money and return government bailout funds.
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NEW YORK (Reuters) -- Three large U.S. banks deemed by the government to have sufficient capital Monday announced large common stock offerings, and will use proceeds to repay government investments under a bank bailout plan.
U.S. Bancorp said it plans to raise $2.5 billion, Capital One Financial Corp. roughly $1.75 billion and BB&T Corp. $1.5 billion. Capital One said its offering will total 56 million shares.
BB&T also said it will reduce its quarterly dividend 68% to 15 cents per share from 47 cents, saving $725 million a year, following 37 straight years of increases. U.S. Bancorp also plans to sell medium-term notes.
The three banks were among the 19 lenders to undergo government "stress tests" of their ability to weather a long and deep economic downturn, and were among the nine found not to need more capital.
U.S. Bancorp took $6.6 billion from the government's Troubled Asset Relief Program, while Capital One took about $3.55 billion and BB&T $3.1 billion.
Hundreds of lenders took money from the program, which was designed to spur lending and improve the economy.
Yet many now view TARP as an albatross that imposes too many restrictions, including on executive pay, and suggests that recipients are desperate for capital.
"It creates excessive controls, it has a negative impact on our people and our strategies, (and) it runs a great risk of politicizing the lending process, which is very unhealthy," BB&T Chief Executive Kelly King said on April 17.
On Friday, Wells Fargo & Co (WFC, Fortune 500) and Morgan Stanley (MS, Fortune 500) , each found to need more capital under the stress test, sold a respective $8.6 billion and $4 billion of stock. Morgan Stanley also sold $4 billion of debt.
Goldman Sachs & Co. (GS, Fortune 500) and Morgan Stanley are arranging the U.S. Bancorp stock offering. Barclays Capital is arranging the Capital One stock offering. Goldman Sachs, JPMorgan (JPM, Fortune 500) and Morgan Stanley are arranging the BB&T stock offering.