One of the first banks to receive money under the government's bailout program now plans to return it.
Massachusetts-based State Street Corp. said that it had begun an offering of common stock and notes and would soon notify the Treasury Department of its plans to return the $2 billion it received last year under the Troubled Asset Relief Program.
In order to return bailout money, the Treasury has said that banks must be able to prove that they are stable enough without it. Selling common stock is one way for banks to raise the money they need while also improving their Tier 1 capital ratio - the prime measure of banking stability.
In a statement, State Street said that it would take the money it received from the stock sale and use it to buy back the preferred stock and warrants it gave the Treasury in exchange for bailout funding.
It also announced plans to open a separate public offering of non-guaranteed senior notes in the near future.
State Street was one of 19 banks to undergo the Treasury's recent series of stress tests. Regulators determined that it did not need to raise additional capital.
The bank is only the latest to declare its interest in returning TARP funding. Last week, at least five banks, including Capital One Financial Corp., BB&T Corp., and U.S. Bancorp announced that they would sell shares in order to give back the billions they received as part of the $700 billion bailout program.
Banks have cited an uncertain regulatory environment and concerns about restrictions on executive pay, dividends and other uses of cash as leading reasons for withdrawing.
Massachusetts-based State Street Corp. said that it had begun an offering of common stock and notes and would soon notify the Treasury Department of its plans to return the $2 billion it received last year under the Troubled Asset Relief Program.
In order to return bailout money, the Treasury has said that banks must be able to prove that they are stable enough without it. Selling common stock is one way for banks to raise the money they need while also improving their Tier 1 capital ratio - the prime measure of banking stability.
In a statement, State Street said that it would take the money it received from the stock sale and use it to buy back the preferred stock and warrants it gave the Treasury in exchange for bailout funding.
It also announced plans to open a separate public offering of non-guaranteed senior notes in the near future.
State Street was one of 19 banks to undergo the Treasury's recent series of stress tests. Regulators determined that it did not need to raise additional capital.
The bank is only the latest to declare its interest in returning TARP funding. Last week, at least five banks, including Capital One Financial Corp., BB&T Corp., and U.S. Bancorp announced that they would sell shares in order to give back the billions they received as part of the $700 billion bailout program.
Banks have cited an uncertain regulatory environment and concerns about restrictions on executive pay, dividends and other uses of cash as leading reasons for withdrawing.
published May 18, 2009, 0 Comments
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