Bank of America sells $19b of securities to repay bailout funds
Offer deemed biggest compared to other US banks that sold stocks
New York: Bank of America Corp sold more than $19 billion (Dh70 billion) of equity on Thursday amid strong investor interest as it races to shed government regulatory curbs that have bedevilled its CEO search.
The money raised will help repay $45 billion in government bailout funds the bank took at the height of the financial crisis as it struggled with heavy write downs stemming from its acquisitions of mortgage lender Countrywide and investment bank Merrill Lynch.
The bank had previously said it planned to sell securities next Monday, but moved the sale forward because of demand.
The size of the deal grew to $19.29 billion of common equivalent securities, from an originally planned $18.8 billion, according to a pricing document sent to investors.
Rise and fall
The securities sold at $15 each, about five per cent below where Bank of America shares closed on Thursday. The securities will convert to common stock once equity investors approve an increase in authorised Bank of America shares.
The bank's shares fell to $15.58 in aftermarket trading.
The offering is the biggest yet in a year that has seen at least 100 US banks sell stock to strengthen their capital as they sustained losses from mortgages, credit card debt and business loans.
Chief Financial Officer Joe Price said on a conference call with investors the bank was seeing signs of credit stabilisation and that managed losses on credit cards had plateaued.
"Consumers continue to experience stress... however we are seeing signs of stabilisation," Price said.
