CHARLOTTTE, N.C. — Bank of America on Wednesday evening said it will repay all of its $45 billion in government loans, a move that would help remove the stigma of being a bailout recipient and potentially dial back government scrutiny of its operations.
The repayment to U.S. taxpayers will be made after the completion of a securities offering, the bank said. Shareholders will be asked at a special meeting to approve an increase in the bank's authorized shares as part of the offering. No date was set for the meeting.
The bank indicated that it has approval of the U.S. Treasury and regulators.
Bank of America also said agreed to increase its equity holdings by $4 billion by selling assets, actions that need to be approved by the Board of Governors of the Federal Reserve and under contract by June 30. If the asset sales are not completed by the end of 2010, the bank said it has agreed it would raise capital through a common stock offering.
Never miss a local story.
Bank of America had signaled its desire to pay back the loans as soon as possible and has been in talks with the government about the process. But payback had not been expected so quickly, especially with the bank searching for a replacement for departing chief executive Ken Lewis.
"We appreciate the critical role that the U.S. government played last fall in helping to stabilize financial markets, and we are pleased to be able to fully repay the investment, with interest," Lewis said in a statement. “As America's largest bank, we have a responsibility to make good on the taxpayers' investment, and our record shows that we have been able to fulfill that commitment while continuing to lend. We believe that this is good news, not only for the U.S. taxpayer and our company, but for the country as it is a milestone indicating that public policy has succeeded in helping our industry and the economy begin to recover.”
Last month, the federal government asked the largest banks that still hold money from the Troubled Asset Relief Program, including Bank of America, to submit their plans for how and when they expect to repay the money. The banks must show they can raise money from private investors – in other words, without government backing – and that even without the TARP money they would still meet stringent capital requirements that the government put in place after stress tests in the spring.
Read the full story at CharlotteObserver.com