BofA officials lay out plans to raise capital, repay TARP loan
NEW YORK -- Bank of America's chief executive Ken Lewis laid out his plans for raising capital to meet regulatory requirements after the government said the nation's largest bank needs to raise $33.9 billion.
In an interview with CNBC, Lewis also said Friday that the economy is bottoming and he plans to remain in charge of the bank through the recovery.
The Charlotte-based bank will raise capital through asset sales, earnings in upcoming quarters and raising capital from private investors, Bank of America officials said during a conference call Thursday night. The bank believes those actions should allow it to avoid converting some of its $45 billion in government preferred stock TARP loans to common stock.
Bank officials said the company is mulling sale of its Columbia asset management unit, and several other businesses, and may enter several joint ventures. It previously said it planned to sell its First Republic Bank unit, which it inherited when it bought Merrill Lynch. Those sales could help it raise $10 billion.
Another $17 billion will likely be raised by issuing common stock, including converting at less than face value some preferred shares held by private investors. The rest of the capital could come from cash flow from operations in coming quarters.
On Thursday, annoucning the results of its bank stress tests, the government indicated that Bank of America would need an additional $33.9 billion in capital to meet potential losses if the economy worsens. The bank will have six months to raise capital to create that cushion.
"We have significant opportunities to meet our target. We do not need new government money. And we do not intend to convert the existing TARP money we have (to common stock). Our game plan is designed to help get the government out of our bank as quickly as possible," Lewis said on Thursday's call with analysts.
In the CNBC interview Friday, Lewis said he plans to remain as CEO to help the bank raise the required cash to meet the government's stress test and repay the TARP loans.
