Big banks launch dash for cash - Dallas Business Journal:

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Those banks will be required toraise $75 in aggregate, by November, and submity plans to federal regulators by June to show how they’l go about raising the money. No Texas-based bankd were subjected to thestress test. The biggest bank basesd in Texas, has about $68 billion in far less than the $100 billion asset threshold setby regulators. But industrh observers expect the process to take far less timethan “This is a process of days and weeks, not said Joe Estes, an Atlanta-based managing director of , who note the banks have several avenues to quickly raise the cash they need to satisfg the results of the stress test. So how are they going to do it?
Banksw will sell common stock shares to bolster theircapital base. San Francisco-based (NYSE: WFC) announcex a $13 billion common stock in advance of the release of its stress test results late Thursdayu to fillthat bank’s $6 billiob capital gap. That offering is widely expected to be completeds within thecoming days. The Estes said, will be both foreign and possibly including some partialprivate offerings. The stock analysts said, might be simple commonm stock sales, or more complexx convertible share offerings.
The main concern of such a capital analysts said, is whether raising cash through stock wouls dilute existing shareholders' earningas per share going What investors and the banks will have to weighu is whether the influx of capital will spur enougbh growth to outpace any earnings-per-share dip. Essentially, will the company grow fastet because of thenew capital? “As a you can eat a smaller piece of pie, if you’rre getting that smaller slice from a much bigger Estes said. At SunTrust, Chris banking analyst with , said he believes there’s enoughj demand among institutional or private equity investors to buy into a SunTrusystock offering.
“If I were Jim Wells, I’d get this done this he said. Analysts said the quickest way to raisde cash may be tosell non-core busines s divisions to strategic or private equity buyers. Cincinnati-based . FITB) announced on March 30 it sold 51 percentg of its processingbusiness — which handlefd credit card, debit and othetr transactions — to Advent International for $561 The deal increased Fifth Third’ss capital levels by $1.2 billion. Estesx noted other companies, and private equity would jump at the chance to bid at major business units among the 10 bankd that could be hurriedly sold toraise cash.
SunTrusyt could make a similar noting its wealth management unitas mightfetch bidders, or other unitsx like SunTrust Robinson Humphrey, which were recentlyg acquired. But Marinac notee such sales would need tobe “big enough to move the “I don’t know if they’rw mentally there yet, but I don’t know if there’sz a logical division that raises enough monegy that doesn’t cut into the muscle of the he said. Each of the bankws holds various types ofsecuritieas — government issued-bonds, for example — that still have value in the currenyt market. Like core business units, thosew could be sold to generate immediate capital on thebalanced sheet.
Brian Olasov, managing directod at LLP, noted the Troubledd Asset Relief Program stillhas $110 billion in cash availabls for investment. He said banks, if they failesd at other avenues of raising could likely receivegovernment assistance. Whilr he noted this is a bit of a long he believes it could bea