Capital One, Key Among 19 Banks Getting $35 Billion

[Mrs. Sharon B. Hodge]

Capital One, Key Among 19 Banks Getting $35 Billion
Oct. 27 (Bloomberg) -- At least 19 regional U.S. banks, including SunTrust Banks Inc. and Capital One Financial Corp., accepted $35 billion in government cash as the Treasury rolled out the second half of its $250 billion package to shore up lenders and thaw frozen credit markets.


Treasury Secretary Henry Paulson is doling out cash to recapitalize struggling lenders and jump-start takeovers in More.. an industry suffering from the worst housing crisis since the Great Depression. SunTrust, Capital One, KeyCorp and PNC Financial Services Group Inc. are among regional lenders that have agreed to take cash so far by selling preferred shares to the U.S.


....This is just unprecedented,'' said BMO Capital Markets analyst Peter Winter. ....What the government has said is that you can't let the financial system fail, and if this doesn't work they'll come up with another plan.
''

The capital infusions come as governments worldwide do all they can to ensure the stability of banks. Kuwait's central bank said it will guarantee deposits at Gulf Bank KSC, which remains solvent after clients defaulted on currency derivatives contracts, the state-run Kuwait News Agency reported. Paulson already gave $125 billion to nine of the biggest U.S. lenders.


Some banks are raising money on their own. Mitsubishi UFJ Financial Group Inc., the Japanese bank investing $9 billion in Morgan Stanley, said it will sell as much as 990 million yen ($10.7 billion) of stock to replenish its capital. Japan's biggest bank may sell as much as 600 billion yen of common shares in the 12 months starting Nov. 4.


Niagara Falls, Beverly Hills

The latest U.S. banks to benefit from the government's Troubled Asset Relief Program, or TARP, spanned the nation, ranging from City National Corp., in Beverly Hills, California, to First Niagara Financial Group Inc., based in upstate New York near Niagara Falls. The banks may be joined by life insurance companies, some of which are now in talks with the government about potential Treasury investments, said Jack Dolan, spokesman for the American Council of Life Insurers in Washington.


Dolan declined to say which companies are involved in the talks. Spokesmen for MetLife Inc. the biggest U.S. life insurer, and No. 2 Prudential Financial Inc. declined to comment today. Most U.S. property and casualty insurers won't participate, according to a statement today from Evan Greenberg, chief executive officer of Ace Ltd. and chairman of the American Insurance Association.


State Street, Northern Trust

Other financial firms participating in the program included State Street Corp., the world's largest money manager for institutions, which is selling a $2 billion stake. Northern Trust Corp., a custody bank that oversees $3.53 trillion, plans to sell the government a $1.5 billion stake.


....We're happy to do our part to support the financial and economic stability of the U.S.,'' Capital One spokeswoman Tatiana Stead said in an e-mailed statement. The McLean, Virginia-based bank is raising $3.6 billion.


News of the infusions helped spur gains in U.S. financial stocks. Huntington Bancshares Inc. advanced 15 percent to $9.17 as of 4:10 p.m. in New York Stock Exchange composite trading. Regions Financial Corp., which is selling a $3.5 billion stake, added 11.3 percent. Fifth Third Bancorp, which expects $3.4 billion from the Treasury, rose 5 percent after earlier surging as much as 20 percent.


BB&T Corp., the best-performing stock in the KBW Index this year, said today it will sell $3.1 billion in preferred shares and warrants to the Treasury. BB&T is based in Winston-Salem, North Carolina.


Tennessee, Cleveland

First Horizon National Corp., Tennessee's largest bank, said Friday it received preliminary approval to receive about $866 million from the U.S. Treasury. PNC on Oct. 24 announced it was buying National City Corp. for $5.2 billion in stock after receiving $7.7 billion from the Treasury. Washington Federal Inc. and Valley National Bancorp said over the weekend they would receive a total of $560 million from the government. City National said it would sell $395 million in preferred stock and warrants.


Cleveland-based KeyCorp plans to sell $2.5 billion in equity. Huntington, of Columbus, Ohio, announced its application for $1.4 billion in a statement today.


The funds will help KeyCorp ....gain flexibility in managing our balance sheet'' and ....enhance our ability to lend to our relationship clients,'' Chief Executive Officer Henry L. Meyer said in a separate statement today.


Dallas, San Francisco

The bank said that had the $2.5 billion capital increase been in place on Sept. 30, KeyCorp's Tier 1 ratio, measuring the ability to absorb losses, would have been about 10.76 percent, rather than 8.48 percent. A ratio above 6 percent puts banks into a ....well-capitalized'' category.


Another bank accepting funds was Comerica Inc. The Dallas- based bank, which also does business in Canada and Mexico, said today that it plans to sell $2.25 billion in preferred stock and warrants to the Treasury, boosting its Tier 1 ratio to 10.35 percent.


Also included among banks getting funds were UCBH Holdings, the San Francisco-based company that owns United Commercial Bank, which said it expects $298 million from the Treasury. Bank of Commerce Holdings, which owns Redding Bank of California, expects as much as $17 million.


Baltimore-based Provident Bankshares Corp. said today it got preliminary approval to participate in the U.S. program and didn't disclose how much it will get. Old National Bancorp, based in Evansville, Indiana, said today that it has preliminary approval to raise $150 million from the government, and hasn't decided whether to participate.


HF Financial Corp., based in Sioux Falls, South Dakota, said today that it also received preliminary approval to sell a $25 million stake to the government. HF Financial is the parent company for financial firms including Home Federal Bank and Mid America Capital Services Inc.




Following are banks that have announced participation in the
Treasury program.
Some company names have been shortened for
space:

FIRST ROUND
Citgroup $25 billion
Wells Fargo $25 billion
JPMorgan Chase $25 billion
Bank of America $15 billion
Merrill Lynch $10 billion
Goldman Sachs $10 billion
Morgan Stanley $10 billion
Bank of New York $3.
0 billion
State Street $2.
0 billion
TOTAL $125 billion

SECOND ROUND
PNC $7.
7 billion
Capital One $3.
6 billion
SunTrust $3.
5 billion
Regions Financial $3.
5 billion
Fifth Third $3.
4 billion
BB&T $3.
1 billion
KeyCorp $2.
5 billion
Comerica $2.
25 billion
Northern Trust $1.
5 billion
Huntington $1.
4 billion
First Horizon $866 million
City National $395 million
Valley National $330 million
Washington Federal $230 million
UCBH Holdings $298 million
First Niagara $186 million
Old National $150 million*
HF Financial $25 million
Redding Bank $17 million
Provident --**
TOTAL $34.93 billion (35.
18)


*Old National hasn't decided whether to participate.

**Provident didn't say how much it expects.