Wells Fargo plans to repay TARP aid ‘shortly’
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No big bank wants to be the last one in the TARP pit.
On the same day that Bank of America Corp. was reported to be working on a plan to repay part of its federal capital injection under the Troubled Asset Relief Program, Wells Fargo & Co. CEO John Stumpf was on TV promising that Wells would be returning its TARP money ‘shortly.’
Stumpf’s comments were made in an interview with Bloomberg TV. A spokeswoman for San Francisco-based Wells said the session had been scheduled a while ago.
‘We will pay it back shortly,’ Stumpf told Bloomberg, referring to $25 billion in capital received last fall under TARP.
He didn’t give a date, saying repayment has to be worked out with the Federal Reserve. But ‘of all the issues I’m dealing with, this one doesn’t keep me up at night,’ he said.
Many of Wells’ biggest peers, including JPMorgan Chase & Co., Goldman Sachs Group and US Bancorp, already have repaid their TARP funds. That has allowed them to escape the executive-pay and dividend-payout limits imposed on TARP recipients by the Treasury.
On Tuesday, the Wall Street Journal reported that Bank of America wants to repay $20 billion of the $45 billion in aid it received.
Both BofA and Wells in May were ordered by regulators to raise additional capital after they came up short in the government’s ‘stress test’ of big banks’ books. That was a blow to Wells, which naturally would have liked a clean bill of health.
On Tuesday, Stumpf told Bloomberg that Wells was earning enough money to repay TARP capital without having to sell more shares to investors. ‘We don’t want to dilute our existing shareholders,’ he said.
Those shareholders include Warren Buffett’s Berkshire Hathaway Inc., which is Wells’ biggest holder, with 6.5% of the stock.
Highlights from Stumpf’s interview hit the wires just before the stock market closed. Wells’ shares traded as low as $25.81 with about 15 minutes to go in the session, then bounced up following Stumpf’s comments. The stock closed at $26.21, down $1.31, or 4.8%.
The BKX index of 24 big-bank stocks fell 5.8% for the day. BofA slid $1.13, or 6.4%, to $16.46.
Wells’ stock has lagged its average peer since the stress-test results were announced on May 7. Wells is up 5.9% since then, compared with a 14.1% gain for the BKX index.
-- Tom Petruno