It has raised $13.5 billion since May 8 by selling 1.25 billion new shares to investors at an average price of $10.77. The stock was unloaded via at-the-market offerings, which involve continuous selling during regular trading hours at or near prevailing market prices.
The sale is a part of “stress test” strategy conducted on 19 major banks to generate an additional capital to meet the government’s stress-test requirements. To safeguard the bank against future losses, as its loans and other assets are badly hit, the government asked BofA to keep $34 billion in buffer.
As an encouraging sign, many other major banks such as Citigroup Inc. and Morgan Stanley have also successfully sold their stock or non-guaranteed debt.
Joe Price, CFO of BofA said: This strengthens and diversifies our capital structure.
BofA is now confident that it can raise $34 billion without taking any further government help. Ken Lewis, CEO, BofA, said that the bankis planning to raise $10 billion from asset sales, $7 billion from future earnings and another $3.5 billion by the conversion of privately held preferred shares to common shares, in addition to the amount already generated so far this month.
