Stock offerings weigh on shares, hint at growing markets
NEW YORK - KeyCorp, which is among 10 major banks ordered by the government to raise more capital as a buffer against future losses, joined several other banks yesterday in announcing public stock offerings.
The offerings put pressure on financial shares, but underscore the improving conditions in the capital markets and the increasing demand for bank stocks, which have skyrocketed in the wake of the market's two-month rally.
Four banks that have received a clean bill of health from the government - Bank of New York Mellon Corp., U.S. Bancorp, Capital One Financial Corp., and BB&T Corp. - said proceeds from their common stock offerings would go toward repayment of federal bailout funds received last fall, pending government approval.
Banks that received money under the Treasury's financial rescue effort, the Troubled Asset Relief Program, have become subject to increased government scrutiny and limitations on executive pay.
A number of banks including JPMorgan Chase & Co. and American Express Co., have expressed a desire to return the funds as soon as possible.
KeyCorp shares fell 69 cents to $6.28 after the Cleveland-based bank said it will sell up to $750 million of its common shares. Bank of New York Mellon said it will offer $1 billion in common shares in a secondary offering. Its shares closed down $2.60 at $29.55. Minneapolis-based U.S. Bancorp, said it will sell $2.5 billion of its common stock, pushing its stock down $2.04 to $18.50 yesterday. Virginia's Capital One plans to sell up to 64.4 million shares. Shares there dropped $4.24 to $27.10.