Bank of America raises $19B toward TARP repayment

MarketWatch

SAN FRANCISCO — Bank of America Corp. said late Thursday that it raised more than $19 billion selling new securities to help the giant lender wean itself from government support.

Bank of America announced it priced an offering of 1.286 billion common equivalent securities at $15 each. That will raise roughly $19.29 billion.

The company said it will use the money, together with existing funds, to repurchase the preferred stock it sold to the Treasury Department as part of the Troubled Asset Relief Program, or TARP.

Bank of America was one of the first leading U.S. financial institutions to get government money during the financial crisis last year. The lender got another hefty dose of taxpayer support to help it close its acquisition of Merrill Lynch at the end of 2008.

Legal tussles and investor unrest stemming from the Merrill acquisition eventually led to the resignation of CEO Kenneth Lewis, and the bank is still trying to find a successor.

While Lewis is set to leave at the end of this year, one of his final goals was to repay TARP. Relinquishing government support will free Bank of America from some onerous compensation restrictions — possibly helping the company attract a new chief.

The surprise decision to pay off a $45 billion TARP investment it got from the government during the financial crisis may set the framework for the rest of the nation’s banks, which still need to pay back the taxpayers, analysts said Thursday.