Wells Fargo Preps For $25B TARP Repayment

Posted by Orb Staff on December 15, 2009 No Comments
Categories : Residential Mortgage

Wells Fargo & Co. has announced that, pursuant to terms approved by banking regulators and the Treasury Department, it will redeem the $25 billion of Series D preferred stock issued to the U.S. Treasury in October 2008 under the government's Troubled Asset Relief Program (TARP), upon successful completion of a $10.4 billion common stock offering.

The San Francisco-based bank's announcement comes on the heels of similar TARP repayment announcements from Citi and Bank of America.

‘TARP stabilized our country's financial system when confidence in financial markets around the world was being tested unlike any other period in our history. Its success also generated financial returns for taxpayers, including $1.4 billion in dividends paid to the U.S. Treasury by Wells Fargo," says Wells Fargo President and CEO John Stumpf.

Under terms of the authorization from the Treasury and banking regulators to repay the $25 billion, Wells Fargo 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; and increase equity by $1.5 billion through asset sales to be approved by the Federal Reserve's Board of Governors.

To the extent those asset sales are not completed by the end of 2010, Wells Fargo has agreed to raise a commensurate amount of common equity.

SOURCE: Wells Fargo & Co.

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