A New Jersey bank has been approved to repay a portion of the bailout money it received under the Troubled Asset Relief Program.
Valley National Bancorp said it would redeem $75.2 million of the $300 million of common stock it gave the Treasury Department last year in exchange for emergency funding. It will also pay accrued dividends.
Banks both large and small have beaten a path to the Treasury's door in recent months in an attempt to escape what is perceived by many in the industry as a harsh regulatory environment. Concerns about restrictions on executive pay and dividend distribution top the list of complaints.
Some banks have also expressed concerns about the public relations aspects of accepting government money. While some executives avoided the program out of fear of being seen as insufficiently capitalized, others jumped into the program once it was announced that only strong banks could receive bailout money to begin with.
Most executives in the latter group have since changed their minds, believing that the public relations drawbacks far outweigh the advantage of inexpensive capital. At the same time, however, an uncertain economy has made some wary of giving it up to the Treasury. Valley National's incremental approach may reflect a balancing between those two motivations.
"We felt that by adding capital to Valley, we could meet the challenges of those uncertainties from a position of strength at a relatively low cost," said Gerald H. Lipkin, Valley National's chief executive, in a statement.
"We remain well aware of the risks that remain in this severe economic downtown, and at this time, have not requested permission from our regulators or the U.S. Treasury to repurchase the remaining preferred shares," Lipkin said.
Valley National Bancorp said it would redeem $75.2 million of the $300 million of common stock it gave the Treasury Department last year in exchange for emergency funding. It will also pay accrued dividends.
Banks both large and small have beaten a path to the Treasury's door in recent months in an attempt to escape what is perceived by many in the industry as a harsh regulatory environment. Concerns about restrictions on executive pay and dividend distribution top the list of complaints.
Some banks have also expressed concerns about the public relations aspects of accepting government money. While some executives avoided the program out of fear of being seen as insufficiently capitalized, others jumped into the program once it was announced that only strong banks could receive bailout money to begin with.
Most executives in the latter group have since changed their minds, believing that the public relations drawbacks far outweigh the advantage of inexpensive capital. At the same time, however, an uncertain economy has made some wary of giving it up to the Treasury. Valley National's incremental approach may reflect a balancing between those two motivations.
"We felt that by adding capital to Valley, we could meet the challenges of those uncertainties from a position of strength at a relatively low cost," said Gerald H. Lipkin, Valley National's chief executive, in a statement.
"We remain well aware of the risks that remain in this severe economic downtown, and at this time, have not requested permission from our regulators or the U.S. Treasury to repurchase the remaining preferred shares," Lipkin said.
published June 8, 2009, 0 Comments
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