--Treasury to auction stakes in seven banks that received TARP
money
--Government holds stakes in 335 mostly small banks
--Treasury plans to pool small bank stakes together
(Adds details on Treasury's plan throughout.)
By Sarah Portlock and Alan Zibel
WASHINGTON--The Treasury Department said Wednesday it plans to
sell its stakes in seven banks that received bailout funds at the
height of the financial crisis, continuing the process of winding
down the rescue launched in 2008.
The public offering of preferred stock will begin around June 25
and will be priced through a modified Dutch auction, the Treasury
said in a statement.
More than three years after the launch of the Troubled Asset
Relief Program, or TARP, in the fall of 2008, the federal
government still owns stakes in 335 banks, mostly small ones that
have been unable to fully pay back the government. Treasury also
holds large stakes in General Motors Co. (GM), insurer American
International Group Inc. (AIG) and Ally Financial Inc.
The government has recovered $343 billion, or more than 80% of
the $416 billion spent under TARP. Treasury has recovered $264
billion from banks that received TARP money, more than the $245
billion initially invested.
To recoup its investments, Treasury said it would auction its
shares of Fidelity Southern Corp. of Atlanta (LION); Firstbank
Corp. (FBMI) of Alma, Mich.; First Citizens Banc Corp. (FCZA) of
Sandusky, Ohio; MetroCorp Bancshares Inc. (MCBI) of Houston;
Peoples Bancorp of North Carolina Inc. (PEBK) of Newton, N.C.;
Pulaski Financial Corp. (PULB) of St. Louis, Mo.; and Southern
First Bancshares Inc. (SFST) of Greenville, S.C.
So far this year, the Treasury has auctioned off its preferred
stock in 13 banks. That doesn't wipe out the banks'
obligations--the preferred shares don't have voting rights but do
come with dividends that are set to rise to 9% from 5% around the
end of 2013.
Earlier this week, the Treasury Department sent a letter to 200
small banks, saying that it intends to create pools of investments
in small banks that also will be auctioned off.
Due to the small size of Treasury's investments in those banks,
"we believe that a pooled auction may represent the best approach
to attract new private capital for community banks and recover
taxpayer dollars," Michael Harris, director of the bank-rescue
program for Treasury, wrote in the letter.
Banks whose securities are being considered for the pooled
auction will be able to opt out and bid to repurchase their
securities.
Write to Sarah Portlock at sarah.portlock@dowjones.com and Alan
Zibel at alan.zibel@dowjones.com