(Bloomberg) -- Bank of America Corp., the biggest U.S. bank by assets, raised about $13.5 billion in a sale of common stock after U.S. regulators determined it needed more cash to weather an extended recession.
The bank issued 1.25 billion shares at an average price of $10.77 each, according to a statement yesterday. The Charlotte, North Carolina-based company plans to boost common equity capital by $17 billion through the sale of stock and by converting preferred shares mostly held by institutional investors, Chief Executive Officer Kenneth Lewis said May 7.
“The worst is over for Bank of America and it will have absolutely no problem raising more capital,” said Kim Yong Tae, head of overseas investment at Yurie Asset Management Inc. in Seoul, which manages $2 billion in assets. “The minute the U.S. government started pumping taxpayer money into lenders its financial-system risks started easing, and now are completely gone.”
Regulators told Bank of America to raise $33.9 billion after conducting stress tests, the largest amount among the 19 banks examined. Other banks ordered to raise capital include Wells Fargo & Co., which made an $8.6 billion offering, and Morgan Stanley, which raised $4 billion, both on May 8.
“We are pleased to have this portion of our capital plan completed,” Bank of America Chief Financial Officer Joe Price said in the statement. “This strengthens and diversifies our capital structure.”
Bank of America declined 48 cents, or 4.1 percent, to $11.25 at 4:15 p.m. in New York Stock Exchange composite trading. It has dropped 20 percent this year.
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