Public RelationsWells Fargo to repay $25 bn bailout funds
Financial services firm Wells Fargo & Company has said it will repay bailout funds worth $25 billion to the US government.
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The entity is the latest one after Citigroup to announce its decision to give back taxpayers" money, received as part of the Troubled Asset Relief Program (TARP)-- a plan that lends billions of dollars to struggling companies to fight the financial meltdown.
Wells Fargo late on Monday said it would repay TARP funds to the tune of $25 billion.
To repay the amount, the company would sell common stocks worth $10.4 billion and also raise $1.35 billion through its issuance to some employees instead of cash as part of their compensation this year, among others.
In addition, Wells Fargo would increase its equity by $1.5 billion through asset sale, which is subject to Federal Reserve"s approval.
The US government also holds warrants to buy common shares in the company.
Yesterday, Citi said it would give back TARP funds worth $20 billion. Earlier this month, Bank of America had repaid $45 billion of bailout funds.
Wells Fargo paid $1.4 billion in dividends on TARP funds to the US Treasury.
"Repurchase of TARP preferred stock is expected to reduce income available to common shareholders in the fourth quarter by $2 billion as the book value of the preferred stock is less than the amount paid," the statement noted.