Wells Fargo today said that it will repay the 25 billion dollar TARP Funds, received from the U.S. government, upon successful completion of 10.4 million common stock offering. Wells Fargo says this move of TARP repayment is in pursuant with terms approved by the government regulators. The investment bank received the money from the U.S. taxpayers in October of 2008.
The bank, based in San Francisco, released the details of its TARP repayment after the close of the NYSE. In the statement Wells Fargo addressed how it's going to repay the 25 billion TARP funds and also detailed about the
The financial institution, based in San Francisco (California), detailed in a statement released after the close of the New York Stock Exchange. It also said that the profits available to common shareholders will be reduced by 2 billion dollars in the 4th quarter. Wells Fargo said that money available to repay the TARP is less than the amount to be paid.
The banks president and CEO CEO John Stumpf said the TARP program helped to stabilize the economy in the United State. Now the bank is ready to repay that money back.
Wells Fargo's TARP Repayment Terms
The bank will:
- Issue common stock with proceeds of $10.4 billion.
- Raise $1.35 billion through the issuance of common stock to Wells Fargo benefit plans and in lieu of a portion of 2009 incentive cash and other compensation to certain Wells Fargo team members.
- Increase equity by $1.5 billion through asset sales to be approved by the Board of Governors of the Federal Reserve. To the extent those asset sales are not completed by the end of 2010, the company agreed it would raise a commensurate amount of common equity.
CEO Stumpf added that the success of the TARP also brought benefits to taxpayers, "including U.S. $ 1,400 million in dividends paid to U.S. Treasury by Wells Fargo. "Now we're ready to return all funds in a way that serves the interests of American taxpayers and to our customers, employees and investors," he announced.
With the return of 25,000 million dollars, the bank also will save the payment to the U.S. administration of 1,250 million in preferred stock dividends, raising its profit slightly in 2010.
Large Wall Street Banks in Image Makeover
This announcement came the same day when Citigroup released its plan to return 20,000 million dollars in public funds he owed.
The CEO of that bank, Vikram Pandit, said in announcing the plan that Citigroup has a "debt of gratitude" to U.S. taxpayers, while recognizing the obligation of the entity to support the economic recovery loans and assistance to homeowners and other debtors.
Announcements of these two banks to join the communication last week from rival Bank of America had fully refunded the 45,000 million dollars of aid it received.
Citigroup's plan includes raising U.S. $ 20,500 million by issuing shares and debt, allowing you to buy preferred stock worth $ 20,000 million that gave the Treasury Department.
The bank has also agreed with the authorities to end the compromise that settled to share losses from troubled assets valued at about 250,000 million.
In addition, Wells Fargo has decided to grant employees, in January, shares worth of 1,700 million dollars instead of cash amounts. In a day when the New York Stock Exchange rose 0.28%, Wells Fargo shares advanced 0.31%, the Citigroup fell 6.33% and Bank of America closed unchanged.
Today president Barack Obama urged the banks and the lending institutions to lend more. Many homeowners are not able to get advantage of the historically low mortgage rates, as well as the small business have hard time getting access to credit. Now the president says these banks, largely responsible for the latest financial meltdown for irresponsible lending practices, benefited from the taxpayer money. Now the time has come for them to let the taxpayers, homeowners and the businesses to benefit from available credit at low interest rates.
Written by Armen Hareyan
Source: Well Fargo News Release
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