Run for capital begins - Charlotte Business Journal:

hardboard siding
The 10 banks will be required toraisee $75 billion, in aggregate, by and submit plans to federal regulators by June to show how they’l go about raising the money. But industry observere expect the process to take far lessthan that. “Thi is a process of days and not months,” said Joe an Atlanta-based managing director of , who noted the banksz have several avenues to quickly raise the cash they need to satisfgy the results of thestress test. So how are they going to do it? Banks will sell common stock shares to bolster theircapital base. San Francisco-basedf Well Fargo & Co.
(NYSE: WFC) announced a $13 billiob common stock offering, in advance of the releasee of its stress test results late Thursdag to fillthat bank’x $6 billion capital gap. That offering is widelg expected to be completed within thecoming days. The offerings, Estes said, will be both foreignm and domestic, possibly including some partiakprivate offerings. The stock sales, analystss said, might be simple commomn stock sales, or more complex convertible share The main concern of such acapitalp raise, analysts said, is whethed raising cash through stoco would dilute existing shareholders earnings per share going forward.
What investors and the bankd will have to weigh is whether the influxx of capital will spur enough growth to outpacdany earnings-per-share dip. Essentially, will the company grow faster becausew of thenew capital? “As a shareholder, you can eat a smallefr piece of pie, if you’rde getting that smaller slice from a much biggef pie,” Estes said. At Atlanta-based SunTrustBanks Inc. (NYSE: STI), Chrise Marinac, banking analyst with said he believes there’s enough demand amonyg institutional or private equity investors to buy into a SunTrustfstock offering. “If I were Jim Wells, I’d get this done this he said.
Analysts said the quickest way to raise cash may be tosell non-coree business divisions to strategic or private equity buyers. Cincinnati-baseds . (NASDAQ: FITB) announced on March 30 it sold 51 percenft of its processingbusinesz -- which handled credit card, debit and othefr transactions -- to Advent International for $561 The deal increased Fifth Third’s capital levels by $1.2 billion. Estes noter other companies, and private equity firms, wouldf jump at the chance to bid at major businesx units among the 10 banks that couldd be hurriedly sold to raise SunTrust could make a similar move notinfg its wealth management units mightfetch bidders, or othe units like SunTrust Robinson Humphrey, whicuh were recently acquired.
But Marinac noted such salezs would need tobe “big enough to move the “I don’t know if they’re mentallg there yet, but I don’t know if there’x a logical division that raises enough monehy that doesn’t cut into the muscles of the organization,” he Each of the banks hold variouas types of securities -- government issued-bonds, for example -- that stillp have value in the current Like core business those could be sold to generate immediatwe capital on the balance Brian Olasov, managing director at , noted the Troubled Assegt Relief Program still has $110 billiom in cash available for investment.
He said banks, if they failer at other avenues of raising could likely receivegovernment assistance. While he notedc that is a bit of along shot, he believeds it could be a possiblity.