Bank capital: US banks capitalize on stress test results
Banks moved quickly to sell equity last month; After reducing their underweight position, investors will get choosier
"Our game plan is designed to get the government out of our bank as quickly as possible"
Ken Lewis, Bank of America
Told by the Federal Reserve last month to come up with a plan to raise $33.9 billion in common equity before November, Ken Lewis, chief executive of Bank of America, did not bat an eyelid. "We do not need new government money and we do not intend to convert the existing Tarp money we have," he told investors. "In fact our game plan is designed to get the government out of our bank as quickly as possible". It’s brave talk. Less than two weeks later, the bank had already raised $13.5 billion through sales of new common stock and a further $7.3 billion from selling a stake in China Construction Bank, and in the process had garnered credibility for its plans to raise the remainder from a combination of further strategic and common stock sales, conversion of some institutions’ preferred and convertible stock into common equity, and retained earnings.