Bank of America Corp. said Wednesday that it is well on its way to raising the US$34 billion in capital demanded by the U.S. banking regulators’ stress tests.

The firm said it has raised almost US$26 billion in its capital plan since the stress test results were announced and is well on its way to reaching the US$33.9 billion indicated Supervisory Capital Assessment Program buffer set by the Federal Reserve.

The company announced last week that it raised US$13.5 billion through issuing 1.25 billion shares in an at-the-market common stock offering. It has also sold part of its holdings in China Construction Bank, generating a capital gain. The firm has also entered into agreements with certain holders of (non-government) perpetual preferred shares to exchange their holdings of approximately US$5.9 billion of preferred stock into approximately 436 million shares of common stock. Combined, these initiatives have raised almost US$26 billion, or 76% of the total.

Subject to market conditions, the company could issue up to an additional 564 million common shares through the exchange of (non-government) perpetual preferred shares for common stock, it said. In addition, Bank of America has previously said that it plans to sell non-strategic assets such as First Republic Bank and Columbia Management Group and to establish joint ventures. In addition to adding capital, these sales would also reduce the need for capital to support the balance sheet.

“We are quite pleased with the capital-raising effort and the progress toward completing the asset sales and establishment of the joint ventures,” said Joe Price, chief financial officer. “The company hopes to use the majority of the proceeds from these initiatives to reduce reliance on government support for the company.”

IE