Yet another bank has decided to return bailout funds it received from the Treasury Department.
Ohio-based FirstMerit Corp. said it would redeem all 125,000 shares of preferred stock it issued to the Treasury in January for $125 million. It will also pay an accrued dividend.
A number of other financial institutions have announced plans to return money they received under the Troubled Asset Relief Program. They have cited as reasons the negative publicity created by their participation, and a desire to avoid Treasury restrictions on executive pay, dividend increases and other uses of funds.
Paul Greig, First Merit's chief executive, said at a shareholders meeting this month that the bank had always been in good financial condition but considered the TARP money as "an insurance policy."
Treasury is not obligated to accept the redemptions. In order to return the money, banks must first prove they are financially strong enough to survive without the government's capital.
FirstMerit said it worked with a third party to conduct a thorough "stress test" of its balance sheet, and has already consulted with the Treasury about its plans. In a statement, the bank said it expects to complete the redemption of shares by next Wednesday.
It did not identify the outside consultant or provide details of the stress test. Treasury is conducting similar tests on the 19 largest banks to receive bailout money. Results of the tests are expected to be released in early May, though it remains unclear how much detail Treasury will provide the public.
Ohio-based FirstMerit Corp. said it would redeem all 125,000 shares of preferred stock it issued to the Treasury in January for $125 million. It will also pay an accrued dividend.
A number of other financial institutions have announced plans to return money they received under the Troubled Asset Relief Program. They have cited as reasons the negative publicity created by their participation, and a desire to avoid Treasury restrictions on executive pay, dividend increases and other uses of funds.
Paul Greig, First Merit's chief executive, said at a shareholders meeting this month that the bank had always been in good financial condition but considered the TARP money as "an insurance policy."
Treasury is not obligated to accept the redemptions. In order to return the money, banks must first prove they are financially strong enough to survive without the government's capital.
FirstMerit said it worked with a third party to conduct a thorough "stress test" of its balance sheet, and has already consulted with the Treasury about its plans. In a statement, the bank said it expects to complete the redemption of shares by next Wednesday.
It did not identify the outside consultant or provide details of the stress test. Treasury is conducting similar tests on the 19 largest banks to receive bailout money. Results of the tests are expected to be released in early May, though it remains unclear how much detail Treasury will provide the public.
published April 17, 2009, 0 Comments
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