JOIN USIncluding proceeds from the sale of part of its stake in China Construction Bank Corp for $7.3 billion, the bank is now more than half-way toward plugging a $33.9 billion capital shortfall identified by the government.
The bank has issued 1.25 billion shares at an average price of $10.77 each since last Friday, it said in a statement.
A source familiar with the transaction said the bank had sold 800 million shares at $10 each on Tuesday alone.
The average price of $10.77 is 4.3 per cent below Tuesday’s closing price of $11.25. Bank of America shares rose two cents in after-hours trade to $11.27.
The offering by Bank of America comes on the heels of smaller share issuances by other banks ordered to raise capital. This includes offerings of $8.6 billion by Wells Fargo & Co and $4 billion by Morgan Stanley.
As part of Bank of America’s stock sale, which brought in gross proceeds of about $13.47 billion, the bank sold 800 million shares at $10 each on Tuesday alone, a person familiar with the transaction earlier told Reuters.
The person was not authorized to speak because terms of the sale are not public. “We’re pleased to have this portion of our capital plan completed,” Chief Financial Officer Joe Price said in a statement. “This strengthens and diversifies our capital structure.”
Regulators told Chief Executive Kenneth Lewis the bank needed to bolster its finances following a government “stress test” of its ability to handle a deep recession.