BofA Raises $26 Billion, Nearing Capital Target

By TESS STYNES Bank of America Corp. has raised more than three quarters of the $33.9 billion called for by the federal stress-test results, further easing concerns that the banking giant would need to take more government capital. Bank of America said it has reached agreements to convert $5.9 billion of non-government-held preferred stock into about 436 million shares of common stock. The company added it could issue up to an additional 564 million shares by exchanging more nongovernment-held preferred shares. Bank of America had about 6.5 billion shares in the first quarter, before the company sold $13.47 billion in stock, or 1.25 billion shares, earlier this month. The preferred-stock conversion brings the bank's capital-raising effort to $26 billion. The total includes $7.3 billion from selling a stake it holds in China Construction Bank Corp. Chief Financial Officer Joe Price, who said Bank of America is pleased with the to-date capital-raising results, said most of the proceeds will go to "reduce reliance on government support." The company, and the Merrill Lynch business it bought at year's end, received a combined $45 billion last fall from the Treasury Department's capital-purchase program. The stock sales began May 8, the day after federal officials disclosed stress-test results for the nation's 19 largest banks. Several other big banks have successfully issued stock or nonguaranteed debt this month, including Citigroup Inc. and Morgan Stanley, a sign that the gloomy scenarios that obsessed many investors in financial stocks just a few months ago are fading. Bank of America officials have said the company would be able to raise the $33.9 billion without taking additional government investment or converting the government's existing preferred shares into common stock, which would make the U.S. a substantial shareholder in the nation's largest bank by assets. Write to Tess Stynes at tess.stynes@dowjones.com