Bank of America Corp raised US$13.47 billion through a share sale, marking a major step toward meeting the US government’s requirements for capital-raising following the recent “stress testing” of the bank.
Including proceeds from the sale of part of its stake in China Construction Bank Corp for US$7.3 billion, the bank is now more than half-way toward plugging a US$33.9 billion capital shortfall identified by the government.
The bank has issued 1.25 billion shares at an average price of US$10.77 each since last Friday, it said in a statement late on Tuesday. Earlier in the day, a source familiar with the transaction said the bank had sold 800 million shares at US$10 each on Tuesday alone.
The average price of US$10.77 is 4.3 percent below Tuesday’s closing price of US$11.25. Bank of America shares rose US$0.02 in after-hours trade to US$11.27.
The offering by Bank of America comes on the heels of smaller share issuances by other banks ordered to raise capital. This includes offerings of US$8.6 billion by Wells Fargo & Co and US$4 billion by Morgan Stanley.
As part of Bank of America’s stock sale, which brought in gross proceeds of about US$13.47 billion, the bank sold 800 million shares at US$10 each on Tuesday alone, a person familiar with the transaction earlier told Reuters.
The person was not authorized to speak because terms of the sale are not public.
“We’re pleased to have this portion of our capital plan completed,” chief financial officer Joe Price said in a statement. “This strengthens and diversifies our capital structure.”
Regulators told chief executive Kenneth Lewis the bank needed to bolster its finances following a government “stress test” of its ability to handle a deep recession.
Ten of the 19 large US banks that underwent such tests were told this month to raise capital, with Bank of America’s US$33.9 billion shortfall being by far the largest.
Several banks found to have no capital needs sold stock this month to position themselves to repay taxpayer money taken from the federal Troubled Asset Relief Program (TARP).
Bank of America has accepted US$45 billion in TARP money, including US$20 billion in a bailout to help it absorb Merrill Lynch & Co, which it bought on Jan. 1.
The Charlotte, North Carolina-based bank has said it hopes to repay its TARP money within a couple of years, and in any event before Lewis retires. He has suggested he would like to retire by the time he turns 65, which would be in 2012.
MORE VISITORS: The Tourism Administration said that it is seeing positive prospects in its efforts to expand the tourism market in North America and Europe Taiwan has been ranked as the cheapest place in the world to travel to this year, based on a list recommended by NerdWallet. The San Francisco-based personal finance company said that Taiwan topped the list of 16 nations it chose for budget travelers because US tourists do not need visas and travelers can easily have a good meal for less than US$10. A bus ride in Taipei costs just under US$0.50, while subway rides start at US$0.60, the firm said, adding that public transportation in Taiwan is easy to navigate. The firm also called Taiwan a “food lover’s paradise,” citing inexpensive breakfast stalls
TRADE: A mandatory declaration of origin for manufactured goods bound for the US is to take effect on May 7 to block China from exploiting Taiwan’s trade channels All products manufactured in Taiwan and exported to the US must include a signed declaration of origin starting on May 7, the Bureau of Foreign Trade announced yesterday. US President Donald Trump on April 2 imposed a 32 percent tariff on imports from Taiwan, but one week later announced a 90-day pause on its implementation. However, a universal 10 percent tariff was immediately applied to most imports from around the world. On April 12, the Trump administration further exempted computers, smartphones and semiconductors from the new tariffs. In response, President William Lai’s (賴清德) administration has introduced a series of countermeasures to support affected
CROSS-STRAIT: The vast majority of Taiwanese support maintaining the ‘status quo,’ while concern is rising about Beijing’s influence operations More than eight out of 10 Taiwanese reject Beijing’s “one country, two systems” framework for cross-strait relations, according to a survey released by the Mainland Affairs Council (MAC) on Thursday. The MAC’s latest quarterly survey found that 84.4 percent of respondents opposed Beijing’s “one country, two systems” formula for handling cross-strait relations — a figure consistent with past polling. Over the past three years, opposition to the framework has remained high, ranging from a low of 83.6 percent in April 2023 to a peak of 89.6 percent in April last year. In the most recent poll, 82.5 percent also rejected China’s
PLUGGING HOLES: The amendments would bring the legislation in line with systems found in other countries such as Japan and the US, Legislator Chen Kuan-ting said Democratic Progressive Party (DPP) Legislator Chen Kuan-ting (陳冠廷) has proposed amending national security legislation amid a spate of espionage cases. Potential gaps in security vetting procedures for personnel with access to sensitive information prompted him to propose the amendments, which would introduce changes to Article 14 of the Classified National Security Information Protection Act (國家機密保護法), Chen said yesterday. The proposal, which aims to enhance interagency vetting procedures and reduce the risk of classified information leaks, would establish a comprehensive security clearance system in Taiwan, he said. The amendment would require character and loyalty checks for civil servants and intelligence personnel prior to