When and how will Bank of America to repay TARP, raise cash?”
Bank of America Corp (BAC.N: Quote, Profile, Research) shares rose nearly 6 percent Thursday, a day after the largest U.S. bank said it would soon repay $45 billion in government bailout funds. The shares were up 92 cents to $16.57 in early trading on the New York Stock Exchange and helped lift the stock market. The bank said on Wednesday it had agreed with the U.S. Treasury to repay its Troubled Asset Relief Program (TARP) funds over the next few days. Under the pact, the bank will sell up to $18.8 billion in securities that will convert into common stock once shareholders approve an increase in the bank’s shares. The remainder of the $45 billion would be repaid through $26.2 billion in cash. “The full repayment of TARP is an incremental positive in the sense that it relieves the intense regulatory and political scrutiny tied to its receipt of government money,” Credit Suisse analyst Moshe Orenbuch wrote in a note to clients.
Bank of America Corp. said Wednesday it plans to repay its $45 billion in government bailout funds in the next few days, a move that will help the troubled bank recruit a new CEO. The bank said in a statement it would use available cash and raise $18.8 billion in capital to repay the money, which it received during the height of the credit crisis last year and after its purchase of Merrill Lynch & Co. earlier this year. Bank of America has been searching for a successor to CEO Ken Lewis since the bank announced in late September that he planned to retire on Dec. 31.
