SunTrust speeds up capital-raising plan
Written on June 1, 2009
SunTrust Banks Inc, a U.S. Southeast regional bank ordered by federal regulators to raise $2.2 billion of equity capital, on Monday speeded up a previously announced capital-raising plan, hoping to benefit from recent investor demand for banks’ securities.
The Atlanta-based bank said it plans to sell $1.4 billion of common stock, raise $300 million of common equity from selling securities, and raise $250 million of common equity from buying back up to $1 billion of preferred and hybrid securities for cash.
It said it also expects to sell $260 million of common stock under a plan announced May 15 to sell $1.25 billion of stock in an “at-the-market” offering. SunTrust said it has suspended and expects to terminate the offering.
“We are on a clear path to achieve our previously announced capital objectives,” Chief Executive James Wells said in a statement. SunTrust hopes to repay the $4 low cost payday loans.9 billion of aid it took from the Treasury Department’s Troubled Asset Relief Program “at the appropriate time,” he said.
The government last month ordered SunTrust to raise $2.2 billion of equity capital following a “stress test” of its ability to weather a deep recession. SunTrust on May 15 cut its quarterly dividend to a penny per share from 10 cents, the third reduction in a year, saving about $128 million a year.
Goldman Sachs & Co, Morgan Stanley, Sandler O’Neill & Parnters LP and SunTrust Robinson Humphrey are arranging the stock offering. Goldman is lead manager for the tender offer.
SunTrust shares fell 27 cents to $12.90 in premarket trading.
(Reporting by Jonathan Stempel; editing by John Wallace)
Filed in: economics.