Insolvent Banks Screw Shareholders
Banks and securities firms have raised or announced plans to
seek at least $163 billion in capital since July amid losses on subprime-related securities.
Private-equity and sovereign- wealth funds are negotiating deals to replenish capital in return for stakes at discounted prices,
driving down the value of shares held by existing investors.
April 8th, Washington Mutual, the largest U.S. savings and loan, diluted their share base by 50% by
raising $7 billion from an investor group led by TPG at a 33% discount to the previous day's close. The stock has fallen 13% since.
Wachovia, the fourth-largest U.S. bank, raised more than $8 billion earlier this month. The common stock was priced at a 14% discount.
National City needed to raise $7 billion and diluted existing shareholders by more than 50% while sending the stock plummeting almost 28%.
CEO Peter Raskind:
"The bank had to raise enough capital `to stabilize our debt ratings, beyond a shadow of a doubt.
We had counterparties who were uncomfortable interacting with us. That had to stop."
KBW analyst, Melissa Roberts: KBW has identified 23 lenders that may need to raise $12.4 billion as bad loans pile up,
including Bank of America ($7 billion), second-largest in the U.S. by assets, and Sovereign Bancorp, ($1 billion) the second-biggest savings and loan.
Hattip to Bloomberg
The Nattering One muses... long time shareholders get screwed, while the latest insiders in the ponzi scheme get shares at a discount.
Proving again, you just gotta hang in there with full faith and CON-fidence. When will people wake up?
seek at least $163 billion in capital since July amid losses on subprime-related securities.
Private-equity and sovereign- wealth funds are negotiating deals to replenish capital in return for stakes at discounted prices,
driving down the value of shares held by existing investors.
April 8th, Washington Mutual, the largest U.S. savings and loan, diluted their share base by 50% by
raising $7 billion from an investor group led by TPG at a 33% discount to the previous day's close. The stock has fallen 13% since.
Wachovia, the fourth-largest U.S. bank, raised more than $8 billion earlier this month. The common stock was priced at a 14% discount.
National City needed to raise $7 billion and diluted existing shareholders by more than 50% while sending the stock plummeting almost 28%.
CEO Peter Raskind:
"The bank had to raise enough capital `to stabilize our debt ratings, beyond a shadow of a doubt.
We had counterparties who were uncomfortable interacting with us. That had to stop."
KBW analyst, Melissa Roberts: KBW has identified 23 lenders that may need to raise $12.4 billion as bad loans pile up,
including Bank of America ($7 billion), second-largest in the U.S. by assets, and Sovereign Bancorp, ($1 billion) the second-biggest savings and loan.
Hattip to Bloomberg
The Nattering One muses... long time shareholders get screwed, while the latest insiders in the ponzi scheme get shares at a discount.
Proving again, you just gotta hang in there with full faith and CON-fidence. When will people wake up?
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