U.S. Bancorp seeks sale of $2.5B of stock, will repay TARP funds; 10 of 19 banks under “stress test” need to raise $74.6 billion in new capital; Guarantee Bank to close GB Mortgage operations
U.S. Bancorp seeks sale of $2.5B of stock, will repay TARP funds
Minneapolis-based U.S. Bancorp, the corporate parent of US Bank, announced Monday that it intends to sell $2.5 billion in common stock. The bank will use the proceeds to assist it in repurchasing its Series E shares of stock purchased by the U.S. Treasury under its Capital Purchase Plan.
U.S. Bancorp has received about $6.6 billion in TARP funds, including the $2.5 billion sales of Series E stock to the Treasury. The bank previously announced its intent to repay the funds.
As one of the 19 largest financial institutions in the country, U.S. Bancorp was part of the federal “stress test”, the results of which were announced last week. 10 of the 19 largest financial institutions were told they needed to raise an additional $75 billion in capital collectively – however, U.S. Bancorp was one of the banks found to be sufficiently capitalized.
10 of 19 banks under “stress test” need to raise $74.6 billion in new capital
Federal regulators told 10 of the 19 largest financial institutions in the U.S. to raise an additional $74.6 billion in capital, after the results of the Supervisory Capital Assessment Program or “stress test” were announced last week.
Losses at the 19 largest financial institutions could reach $600 billion, if the economy were to take a rougher course, according to the report by the Governors of the Federal Reserve System. Most of those losses would come from the banks’ accrual loan portfolios, including residential mortgages and other consumer loans.
“These examinations were not a test of solvency; we knew already that all these institutions meet regulatory capital standards,” said Federal Reserve Chairman Ben Bernanke. “Rather, the assessment program was a forward-looking ‘what-if’ exercise intended to help supervisors gauge the extent of the additional capital buffer necessary to keep these institutions strongly capitalized and lending, even if the economy performs worse than expected between now and the end of the year.”
The $74.6 billion that 10 of the 19 banks need to raise would allow those banks to absorb those losses, the report states.
The banks that need to raise capital include:
* Bank of America: $33.9 billion
* Citigroup: $5.5 billion
* Fifth Third Bancorp: $1.1 billion
* GMAC: $11.5 billion
* KeyCorp: $1.8 billion
* Morgan Stanley: $1.8 billion
* PNC Financial Services Inc.: $600 million
* Regions Financial Corp.: $2.5 billion
* SunTrust Banks Inc.: $2.2 billion
* Wells Fargo & Co. Bank Holding Company: $13.7 billion
US Bancorp, the parent company of US Bank, was one of the nine banks that did not need to raise additional capital, according to the report. Other banks that did not need to raise capital included American Express Co., BB&T Corp., The Bank of New York Mellon Corp., Capital One Financial Corp., Goldman Sachs Group Inc., JP Morgan Chase & Co., MetLife Inc., and State Street Corp.
Guarantee Bank to close GB Mortgage operations
Brown Deer-based Guaranty Bank recently informed the state Department of Workforce Development that it plans to close its GB Mortgage LLC operations, which will result in the elimination of 62 in the Milwaukee area and 69 jobs in 13 other states. The last date of employment for those employees will be around June 30, the company said.
