Wells Fargo, Morgan Stanley Raise $17 B

123jump.com Staff
09 May, 2009
New York City

Wells Fargo completed its common stock offering today and raised $8.6 billion. Morgan Stanley priced its stock offering at $24 a share and including debt raised a total of $8 billion. Bank of America filed to sell 1.25 billion shares.

[R]10:40AM New York, – U.S. stocks rebounded after nineteen banks and lenders gained. The stress results reassured investors that banks are strong enough to withstand adverse economic conditions in the next two years. After the close Wells Fargo and Morgan Stanley completed the offerings and raised $17 billion.[/R]

U.S. stocks closed higher on Friday after the release of stress test results by bank regulators and lower than expected jobless claims at the end of last week. Wells Fargo, JP Morgan and American Express surged at least 10%.

Regional banks Fifth Third Bancorp ((FITB)) soared 59%, SunTrust Banks, Inc ((STI)) advanced 12% and Marshall & Ilsley Corporation surged 27.5%. Capital One ((COF)) soared 31%.

All nineteen banks and insurance companies closed higher. The banks were quick to raise capital from private investors, those who could.

Morgan Stanley raised $8 billion, through $4 billion in common stock offering and $4 billion in bond offering. Morgan Stanley ((MS)) priced its debt, without the FDIC guarantee a key condition placed by regulators and priced its stock offering at $24 a share.

Wells Fargo ((WFC)) raised $8.6 billion selling 392.5 million shares in common stock offering today. The offering is expected to be complete and proceeds will be collected on May 13, 2009.

The original offering was announced May 7 and priced on Friday. J.P. Morgan Securities Inc. is acting with Wachovia Securities as joint managers for the offering.

Goldman Sachs ((GS)) added 4.4% and Morgan Stanley ((MS)) increased 3.9%. General Electric ((GE)) increased 4%.

Bank of America Plan

Fed regulators required Bank of America to raise $34 billion before June 8.

The bank in a presentation on its Web site noted that it may raise $17 billion in common stock offering, among other sale may sell First Republic and asset manager Columbia Management and sell assets in its portfolio. The bank will also exchange preferred stock at less than par for common stock. The bank also plans to save $7 billion in expenses in ‘other improvements pre-tax pre-provision earnings’ in the second and third quarter.

Bank of America ((BAC)) filed to sell 1.25 billion in common shares to complete the offering in the next few weeks. At Friday’s close price the offering may raise $17.8 billion, regulators have asked banks to add capital buffer of $35 billion.

The bank had Tier 1 capital of 10.1% at the end of the first quarter and Tier common capital of 4.49%.

The bank has total equity of $239.55 billion and Tier 1 capital of $171.06 billion. For regulatory measures the equity capital is reduced by goodwill, minority interests and certain intangible assets to calculate tier 1 capital.