US bank Wells Fargo sold $10.65bn in stock yesterday to raise funds to help it repay the $25bn (£15bn) bailout it received from the US government last year.
The move, which follows a similar measure from Citigroup, makes Wells Fargo the last of the major financial institutions to repay funding from the Troubled Asset Relief Program (Tarp). It also marks a step towards recovery for the US financial system.
By cutting ties with government support the banks are also freeing themselves from constraints on how they reward their key employees.
Wells Fargo said it intends to raise up to $1.5bn of equity through asset sales. Analysts said the bulk of the $25bn in Tarp money will be repaid with the bank’s $14.6bn in cash.
The announcement that the bank would repay the funds came as a surprise after chief executive John Stumpf repeatedly said the bank would repay funds in a shareholder-friendly manner.
Keith Davis, an analyst at Farr Miller & Washington, said: “I think a lot of people expected them to earn their way out of Tarp.”