Magazine article American Banker

Bank of N.Y. to Issue Debt, Stock

Magazine article American Banker

Bank of N.Y. to Issue Debt, Stock

Article excerpt

Having already issued $350 million in debt this summer, Bank of New York Co. may be back in the capital markets soon.

The company filed a registration statement with the Securities and Exchange Commission this week for $1 billion in debt and preferred stock.

Bank of New York said the proceeds would be used for general corporate purposes or to fund investments in subsidiaries.

Capital Standards a Factor

Analysts say Bank of New York may use the money to refinance existing, higher-cost debt or to assure that its bank subsidiaries meet the Federal Deposit Insurance Corp.'s definition of "well capitalized."

Well-capitalized banks will pay the lowest premiums for deposit insurance and are exempt from FDIC restrictions on deposit gathering and rates.

As part of the qualifications for being well capitalized, a bank must have at least 5% leverage, 6% Tier 1, and 10% total capital ratios.

As of June 30, the two banks, Bank of New York and Bank of New York Delaware, exceeded the required leverage and Tier 1 ratios but fell short on total capital.

The company may have used proceeds from the $350 million in 10-year debt issued in July to boost the total capital ratios of the units over the minimums. But analysts said they will not know at the earliest until third-quarter earnings are released.

Redeeming Outstanding Issues

Bank of New York may also take advantage of the low interest rate environment and issue relatively low-cost debt and preferred stock. …

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