Tuesday, 18 November 2008

US govt buys $159 bn worth shares in 30 American banks

NEW YORK (PTI): The US government, under its $ 700-billion bailout plan, has purchased shares in 30 American banks for a total of over $ 150 billion, half of which have gone into Citigroup, JPMorgan Chase and Wells Fargo.

According to the latest transaction report of the Capital Purchase Program, the US Treasury Department has purchased preferred stocks worth $ 25 billion each in Citigroup, JPMorgan Chase and Wells Fargo - three of the biggest banks hit by the worsening financial turmoil.

The government spent $ 158.56 billion for purchasing shares in the 30 banks, which included Bank of America getting $ 15 billion, while Goldman Sachs, Morgan Stanley and Merrill Lynch got $ 10 billion each.

Other major recipients of the funds under this program include Bank of New York Mellon ($ 3 billion), State Street Corp ($ 2 billion), Sun Trust Bank ($ 3.5 billion), BB&T Corp ($ 3.13 billion), Comerica ($ 2.25 billion), Regions Financial Corp ($ 3.5 billion), Capital One ($ 3.55 billion), KeyCorp ($ 2.5 billion) and US Bancorp (about $ 6.6 billion).

In the first round of the program, the Treasury injected $ 125 billion for shares in nine banks - namely, Citigroup, BoA, Goldman Sachs, JPMorgan Chase, Morgan Stanley, Wells Fargo, State Street, Merrill Lynch and Bank of New York Mellon Corp.

The government has also purchased preferred stocks in banks like Bank of Commerce Holdings, 1st FS Corp, UCBH Holding, Northern Trust, Broadway Financial, Washington Federal, Provident Bancshares, Umpqua Holdings, First Horizon National Corp, Huntington Bancshares, Valley National Bancorp, Zions Bancorporation, Marshall & Ilsley and TCF Financial.

After the two rounds of capital purchase program for publicly traded banks, the government said privately held banks can apply for assistance under the $ 700-billion bailout plan till December 8. A total of about 3,600 private banks are said to be eligible under this program.

The Treasury said the institutions that have applied for a bank or thrift holding company status on or before December 8 are eligible to apply to the TARP (Troubled Asset Relief Program) on a conditional basis.

Last week, Treasury Secretary Henry Paulson said, they would not be buying toxic mortgage assets from financial institutions as envisaged earlier in the mega rescue plan. PTI

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