At least 15 additional banks announced they will participate in the Treasury Department’s Capital Purchase Program, on top of the 9 that did so initially.
The program authorizes the government to buy up to $250 billion of senior preferred shares in U.S. financial institutions, as part of its efforts to give them a firmer capital foundation and to increase credit availability to consumers and businesses.
Treasury originally announced that half of that amount had been infused into nine large banks, and encouraged other strong firms to also participate.
The 15 new participants include PNC Financial Services Group, $7.7 billion; Capital One Financial, $3.55 billion; Regions Financial, $3.5 billion; SunTrust Banks, $3.5 billion; Fifth Third Bancorp, $3.4 billion; KeyCorp, $2.5 billion; Comerica Inc., $2.25 billion; State Street, $2 billion; Northern Trust, $1.5 billion; Huntington Bancshares, $1.4 billion; First Horizon National, $866 million; City National, $395 million; Valley National Bancorp, $330 million; Washington Federal, $200 million; and First Niagara Financial Group, $186 million.
Some published reports have suggested that banks receiving the government capital are using it not to make loans but to finance acquisition plans, pay dividends to shareholders, or just sit on it. In fact, the announcement of PNC’s $7.7 billion stock sale to the government coincided with the bank’s announced that it was acquiring National City Corp. for $5.58 billion.