Fifth Third to raise capital by selling stock

Posted May 21st 2009 9:45AM by Mark Fightmaster
Filed under: Financial Crisis

Cincinnati-based Fifth Third Bancorp (NASDAQ: FITB) announced Wednesday that it plans to sell stock in order to raise capital. FITB plans to sell $750 million of common stock in order to meet its commitment to push its capital beyond the $1.1 billion it needs according to the recent stress tests.

The bank will perform two transactions to help provide the common equity. FITB plans to sell up to an aggregate of $750 million of its common shares occasionally with an "at the market" offering through Morgan Stanley and Merrill Lynch. The firm expects to use a part of the proceeds of shares issued under the offering to fund the cash portion of its offer to exchange cash and common shares for Series G convertible preferred depositary shares.

FITB also plans to use the proceeds of the offering that is not utilized in the exchange offer, which include the issuance of qualifying debt to repay all or a portion of the preferred stock and warrants issued to the U.S. Department of Treasury. These moves are subject to consultation with and approval from regulatory authorities.

Technically, shares of the banking firm have managed to rally, but they have met resistance at their 50-week moving average. This trendline has provided resistance since 2007, with the stock backing away from this trendline twice since September 2008. The stock will need to garner some momentum in order to break this resistance, momentum that it has proven unable to accumulate in the past.

Tags: fifth third, fifth third bancorp, FifthThird, fitb, inthenews, TARP money, TARP repayment

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Reader Comments (Page 1 of 1)

5-21-2009 @ 11:12AM

Iridium said...

Well 5/3rd stock is up 700% since the drop to $1 a share. I would think selling shares to raise money would be a no brainer.

There is still no evidence that can show how the stock somehow managed an insane rally but it is good for the company. Not so good for the long time shareholders that are still down 500% over 3 years.