KeyCorp meets $1.8 billion capital-raising goal set by feds
By ARIELLE KASS
9:44 am, July 2, 2009
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KeyCorp has raised the $1.8 billion in Tier 1 common equity required by the federal government as a result of stress tests performed in May.
The bank was required to increase its capital buffer by November, as were several of the 19 banks whose balance sheets were tested.
Key boosted its common equity by $540 million by exchanging Series A preferred stock and trust preferred securities for common shares. That move also will reduce its dividend and interest obligations by $70 million.
Previously, the bank had raised $1.3 billion.
About 42% of the more than 5 million Series A shares outstanding were exchanged for common stock. Key will issue about 29.2 million common shares in exchange for the Series A shares and 46.3 million common shares in exchange for the trust preferred securities.
The bank also said it expects to launch a separate exchange offer for additional trust preferred securities that are outstanding. Only a portion of the $1.74 billion, primarily held by retail investors, would be expected to be exchanged.
Key chairman and CEO Henry Meyer III said in a statement that the offers are part of a broad capital plan to ensure that Key will be strong if the economy continues to worsen.
“With these actions we are even better situated, with strong capital ratios,” he said.
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