SunTrust Accelerates Capital-Raising Plan

SunTrust Banks Inc. (STI) made a public offering of $1.4 billion of its common shares today as it aims to bolster its capital levels following a federal regulatory mandate.

The company is required to raise $2.2 billion of equity capital to withstand headwinds in case the economy worsens.

SunTrust has sold about $260 million of its $1.25 billion "at-the-market" offering that was announced last month. However, that offering is now suspended and likely to be terminated after the $1.4 billion sale is completed.

SunTrust plans to use the proceeds from the $1.4 billion public offering to buy back up to $1 billion in preferred and hybrid shares. SunTrust also aims to raise $300 million of common equity from the sale of investments.

With this move, the Atlanta-based lender stepped closer to its plans of repaying the $4.9 billion it had received under the Troubled Asset Relief Plan (TARP).

Shares of this Zacks #3 Rank ("Hold") company are down more than 2% today, and moving on lower-than-normal volume of 9.5 million, compared with the daily average of 18 million.

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