DOW JONES NEWSWIRES
KeyCorp (KEY) said offers to exchange preferred securities for
cash and common stock have boosted common-equity levels some $540
million, helping the Ohio regional bank surpass its target of a
$1.8 billion increase, as dictated by government stress tests.
The Ohio regional bank, like other companies both inside the
financial industry and out, have been swapping preferred securities
for common stock, in part to cut dividend payments but also to
boost common-equity levels. KeyCorp said in May when the stress
test results were announced that exchanging preferred stock for
common shares was among the ways it might plug the $1.8 billion
hole.
KeyCorp announced last month an offer to swap $503.3 million of
series A preferred common stock and $797.6 million of
preferred-trust securities for cash and stock. The company said
Wednesday that 2.1 million shares of the preferred stock and $294
million of the trust-preferred securities were tendered. There will
be 2.9 million shares of the series A perferred stock outstanding
after the exchange is completed.
KeyCorp will issue 75.5 million common shares through the
exchange efforts. The company has some 500 million shares
outstanding.
The bank wasn't a big subprime player but expanded aggressively
into hot markets that became deeply troubled and has grappled with
surging loan losses. In April, it swung to a first-quarter loss as
it sharply boosted its loan-loss provisions again and cut its
quarterly dividend 84% to a nominal 1 cent a share.
The company also received $2.5 billion last fall from the
Treasury Department's capital-purchase program.
In recent trading, KeyCorp shares were down 0.8% at $5.20. The
stock is down 40% this year.
-By Mike Barris, Dow Jones Newswires; 212-416-2330;
mike.barris@dowjones.com