BofA raises $26 bn in capital target

NEW YORK: Bank of America Corporation has raised nearly USD 26 billion in fresh capital since the US directed the banking entity to mop up USD 33.9 billion following the rigorous stress tests.

The bank today in a statement said it has raised almost USD 26 billion in its capital plan since the results of the stress tests. The amount accounts for 76 per cent of the total capital target of USD 33.9 billion.

The entity, which has been rattled by the financial turmoil, noted that it has entered into agreements with certain non-government holders of perpetual preferred shares to exchange their USD 5.9 billion-worth holdings of preferred stock into about 436 million shares of common stock.

BofA raised USD 13.5 billion through issuing 1.25 billion shares and has also sold part of its holdings in China Construction Bank, generating a capital gain.

"Contributing to the capital plan, these initiatives also benefit Tier 1 common capital by USD 1.8 billion by reducing the deferred tax asset deduction," it added.

Earlier, the company had announced plans to sell non-strategic assets such as First Republic Bank and Columbia Management Group and to establish joint ventures.

After conducting the stress tests on 19 leading bank holding entities, the Federal government asked 10 of them, including BofA, to raise extra capital to the tune of USD 75 billion.