4 US Banks Selling More Of Their Stocks

Posted by Kris | Monday, May 11, 2009 | | 4 comments »

The top is near?! The banks are selling their own stock at good price to the retailers. Isn't this the classical way to make a killing by the big fishes?

Four big U.S. banks selling stock

NEW YORK (Reuters) - Four big U.S. banks on Monday announced plans to sell more than $6 billion of common stock, in an effort to raise capital and repay funds received under the government's bank bailout program.

U.S. Bancorp (NYSE:USB - News) plans to sell $2.5 billion of stock, and is also selling $1 billion of debt. Capital One Financial Corp (NYSE:COF - News) sold $1.55 billion of stock, while BB&T Corp (NYSE:BBT - News) is selling $1.5 billion and KeyCorp (NYSE:KEY - News) $750 million.

BB&T also reduced its quarterly dividend 68 percent to 15 cents per share from 47 cents, saving $725 million a year, following 37 straight years of dividend increases.

The offerings were announced three days after Wells Fargo & Co (NYSE:WFC - News) and Morgan Stanley (NYSE:MS - News) sold a combined $12.6 billion of stock. Morgan Stanley also sold $4 billion of debt.

The banks were among 19 lenders to undergo government "stress tests" of their ability to weather a deep economic downturn.

U.S. Bancorp, Capital One and BB&T were among the nine found not to need more capital, while KeyCorp was ordered to raise $1.8 billion. Regulators last week ordered 10 lenders overall, including Wells Fargo and Morgan Stanley, to raise a combined $74.6 billion. 

(They are not required by the "STRESS TEST" to raise the money but they went ahead to do it. This means that the test is not strigent enough or the banks trying to lure in suckers to buy their common stock at a higher price in this rally)

Banks are scurrying to raise capital after improved investor sentiment caused shares in the sector to more than double from their lows in early March, despite worsening credit conditions in housing, commercial loans and credit cards.

"They're trying to get while the getting is good," said Walter Todd, who helps invest $650 million at Greenwood Capital Associates LLC in Greenwood, South Carolina. "Fundamentals of banks appear not as bad they were, but they are still not good given the underlying conditions in the economy."

In morning trading, U.S. Bancorp shares fell 5.5 percent to $19.41; Capital One fell 11.4 percent to $27.77; BB&T fell 5 percent to $25.02, and KeyCorp fell 4.6 percent to $6.65.


  1. Everything Malaysia // 1:48 PM  

    wah...another good finance blog can be added !

    airasia need a lot of cash because they still need to pay for their keep coming new planes.

  2. Kris // 9:17 PM  

    Thanks for the compliment. :)

    Hope they stay around for long cause they offer a healthy competition to our national carrier.

  3. Mohd Radzian // 11:55 AM  

    Read the news as the troubled companies (ie bank) has to sell shares to pay back debt.

    What about non-troubled companies ?
    Are their situation the same as troubled companies ?

    Example, if one makes lot of profit , why should they share their profit to other investor by selling their stock ( and hence less dividend) ?

    Something to think about.

  4. Kris // 2:09 AM  

    This clearly tells us that they are hiding under a ticking time bomb..

    More trouble are treading along the surface of the water..

    Common sense will tell us that these companies are in deep trouble.

    Dilution of stock is very bad for current investors but is good if you are planning your virgin entry into these stocks. Provided of course these companies don't go bust like Lehman. LOL