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Friday, November 27, 2009
Bove: Banks May Be Paused For Stock Offerings
By Darryl R. Isherwood
FOXBusiness
With rumblings from the U.S. Treasury that it may demand payback of funds released under the Trouble Asset Relief Program, many large banks may be forced to make public offerings iin the near future, analyst Dick Bove said in a research note Friday.
Bove said while many banks have the cash to pay back their TARP money, capital requirements may force them to issue stock to raise money.
“Virtually all of the banks can easily redeem their TARP preferreds from current cash holdings,” Bove said in a research note. “However, it may be that only 3 of the top 30 would have an adequate Tier 1 Capital ratio if they redeemed these preferreds.”
Bove said it is believed the Treasury is looking for Tier 1 Capital ratios of 12 percent, forcing many to rasie additional capital before repaying TARP funds.
Several of the country’s largest banks, including Bank of America (BAC) Wells Fargo and Company (WFC) and PNC Financial Services Corp. (PNC) still have outstanding TARP funds.
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