Bank of America (NYSE: BAC) may have received a lot of bad press lately thanks to allegations of mishandling foreclosures, and the loss of top producers in certain lines of business, but there are some positive signs surfacing as well. It seems that the firm is close to having raised the $3 billion in additional capital it was required to do as a condition of exiting the government’s bailout program, suggesting it may be able to avoid selling additional shares to meet the government requirement.
In its third quarter earnings filing, the bank disclosed it had raised $1.9 billion and could raise the balance if needed through equity awards to certain executives. Since that time, it has sold a portion of its stake in BlackRock (NYSE: BLK) and the rights to participate in a $9.2 billion rights offering by China Construction Bank. Spokesman Jerry Dubrowski has commented that the firm has not disclosed the total proceeds from those sales however, and will not be able to do so until the quarter closes. The Financial Times reported Bank of America has told the Fed it is close to having raised the $3 billion it needs.
Regardless of how much Bank of America has raised, the Federal Reserve still needs to sign off on the fact that the commitment has been met. A call to a Fed spokeswoman was not returned. Nancy Bush, analyst with NAB Research, says if Bank of America has met the Fed’s requirements, it won’t need to raise additional equity. “They will have jumped through the last hoop on TARP and they will be largely out from government strictures at that point,” she says.
