12 May 2009

Big US banks selling stock to repay government

1:59 pm on 12 May 2009

Four big US banks are planning to sell shares to repay funds from the government's bank bailout program, after federal stress tests showed they can weather a deep recession without new capital.

US Bankcorp, Capital One, BB&T and Keycorp plan to raise $US6.55 billion.

The banks were among 19 lenders to undergo government tests of their ability to weather a deep economic downturn.

Regulators last week ordered 10 lenders, including Wells Fargo and Morgan Stanley, to raise a combined $US74.6 billion.

Banks are raising capital after improved investor sentiment caused shares in the sector to more than double from their lows in early March, despite worsening credit conditions in housing, commercial loans and credit cards.