In the wake of the results of last week’s stress tests that the Fed conducted on the largest US banks, several of the institutions involved are flooding the market with stock offerings. Some, like KeyCorp and PNC, are raising capital to meet the requirements stipulated by the tests. Some of the other companies that “passed” their stress tests, such as Bank of New York Mellon, BB&T, and Capital One, are issuing shares to help repay the money they received through TARP.
Whatever the intent, all of the firms mentioned above stand to add billions of dollars to their coffers. But the big winners in all this might be the few remaining firms with bulge-bracket investment banking capabilities that are reaping fat underwriting fees.
Morgan Stanley, which is offering stock of its own to help pay back TARP funds, is at the top of many of the tombstones. It acted as the lead or joint bookrunner for BB&T, BNY Mellon, Key, PNC, and U.S. Bancorp. JPMorgan Chase, Goldman Sachs, and Barclays Capital are also getting in on the underwriting action. The additional business should come in handy amid the moribund M&A and IPO markets.