SAN FRANCISCO (AP) – Wells Fargo plans to sell $10.4 billion in new stock to help repay all $25 billion in bailout aid it received from the government at the height of the market meltdown last fall.
The announcement Monday from the San Francisco-based bank comes hours after Citigroup said it would repay $20 billion worth of taxpayer funds.
Wells Fargo spokeswoman said the company wasn't making the announcement out of pressure following Citigroup's move.
"We've said for quite some time that we wanted to repay at the appropriate time," she said.
The move will extricate Wells Fargo from the pay restrictions and close oversight that came with the bailout program. The company said it paid $1.4 billion in dividends to the government under the terms of its agreement.
Wells Fargo said it expects the plan will reduce its fourth-quarter income by $2 billion but add to its per-share earnings in 2010. Handing back the money will save the bank from paying $1.25 billion a year in preferred stock dividends.
The company plans to come up with $1.35 billion by diverting some of the money it had set aside for 2009 bonuses and by issuing its stock to company benefit plans.
Wells Fargo also plans to sell $1.5 billion in assets by the end of next year or raise more capital to reach that amount.
The company made the announcement after the closing bell on Wall Street. Its shares rose 56 cents, or 2.2 percent, to $26.05 in after-hours electronic trading. The stock ended regular trading at $25.49, a gain of 8 cents.
Copyright © 2009 The Associated Press. All rights reserved.