Bank of America’s Current Capital Raising Status (BAC)

Bank of America Corporation (NYSE: BAC) has just issued an update on its capital raising to date.  The banking giant has raised almost $26 billion and said it is “well on its way” to that $33.9 billion buffer that the Fed said it needed back at the release date of the stress test.

Last week came the announcement that the company raised some $13.5 billion via a 1.25 billion “at the money” share offering.  The company had also seen a capital gain from its China Construction Bank sale.  The bank said that this generated a boost to Tier-1 capital in the amount of $1.8 billion by the deferred tax asset deduction.

An interesting notion here is in the agreement with certain preferred holders, and these are non-government preferred holders.  These were exchanged as $5.9 billion of preferred stock for approximately 436 million shares of common stock.  The bank noted this added $5.9 billion to its Tier-1 capital.

It sounds like Bank of America will continue raising capital when it can.  It said it could issue up to an additional 564 million shares of common stock through the exchange of perpetual preferred shares not owned by the government, subject to market conditions.

The bank has also noted that it previously said it would divest First Republic Bank and Columbia Management Group, as well as the notion that it would establish joint ventures.

This is clearly an effort to get out from under government scrutiny, and ultimately to get out from under the TARP conditions.  The majority of the proceeds are being earmarked to reduce the reliance on government support.

B of A shares are up 2.6% at $11.29 in early trading and we have already seen some 10 million shares trade hands.

JON C.OGG