Fifth Third Bancorp (FITB) and Huntington Bancshares (HBAN) revealed late Wednesday capital-raising action plans. After failing to successfully endure the government’s stress tests, meant to evaluate the potential performance of the nation’s 19 largest banks under more severe economic conditions, Fifth Third was told on May 7 it must raise a capital buffer in sum of $1.1bn. The company says two capital transactions, if successful, will provide common equity capital beyond the capital requirement set forth by the stress test results. Fifth Third plans to sell up to an aggregate of $750m of its common shares from time to time through an at-the-market offering through Morgan Stanley and Merrill Lynch & Co. as sales agents or principals. Some of that $750m will be used to partially fund an exchange offer to some of its preferred stock holders. Holders of the bank’s $1.1bn Series G convertible preferred depository shares will be offered a fixed cash payment of $30 per share, in addition to a conversion of the common shares underlying the Series’ shares. According to the $7.99 closing price of Fifth Third’s shares on May 18, the transaction offer values the Series G depository shares at $99.03, which tops the $91.69 closing price of the preferred securities on May 18, the bank explains. These transactions, along with similar exchanges and the sale of non-strategic assets will more than cover the government’s capital requirement, the bank says. Huntington Huntington didn’t qualify as one of the nineteen biggest banks and was therefore not examined by the government; however, the bank has borrowed $1.4bn in government funds under the Troubled Asset Relief Program. The bank has taken it upon itself to boost common equity by about $675m, in order to help repay the government. Huntington plans to raise $350m selling new common stock. About $75m is expected to result from the after-tax gain on a cash tender for three series of Huntington trust preferred securities. And the remaining $250m will be raised by way of liability management initiatives, the adoption of new accounting standards and the exchanges of other capital instruments, among others initiatives. “These actions should result in a sufficient equity cushion to accommodate even the adverse credit scenario used by the government ” says Stephen Steinour, Huntington CEO. Write to Kelly Curran.
Most Popular Articles
This column is for you if “even the mere thought of not answering your phone makes you start huffing into a brown paper bag,” HousingWire Columnist Dustin Brohm writes.
Realogy, the largest U.S. brokerage, unveiled a new suite of tools for its agents it’s calling a “productivity hub,” with a CRM program and a messaging app.