Wells Fargo & Co. will follow the lead of three U.S. rivals and redeem stock issued under the Troubled Asset Relief Program.
The San Francisco-based financial services giant said Monday that it will redeem the $25 billion of series D preferred stock issued under TARP to the U.S. Treasury in October 2008.
Wells plans to fund the payment with a $10.4 billion common stock offering, paying employees $1.35 billion in common stock in lieu of cash incentive compensation and selling $1.5 billion in assets. In addition, income available to common shareholders will be reduced by $2 billion in the fourth quarter.
The move follows similar recent announcements from its peers.
Yesterday, Citigroup Inc. announced plans to pay back $20 billion in TARP funds, while Bank of America Corp. said last week that it had repurchased $45 billion in TARP investments. JPMorgan Chase & Co. announced in June that it repaid in full the $25 billion TARP preferred stock investment.
