Bank of America says it has spent $2.1 billion on share exchange

Bank of America says it has spent $2.1 billion on share exchange

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(Global Markets) - Bank of America Corp (BAC.N) has issued about $2.1 billion in common stock and senior notes as part of a previously announced swap for outstanding securities held by institutional investors, according to a filing Thursday.

The second largest U.S. bank said two weeks ago that it planned to issue up to 400 million common shares and $3 billion in debt to retire existing preferred shares and trust preferred securities. The move improves a measure of the bank's capital and eliminates interest payments, but dilutes the holdings of common shareholders.

Bank of America Chief Executive Officer Brian Moynihan has repeatedly said the bank does not need to issue common stock to meet new international capital standards. At an investor conference on Tuesday, he said the exchange was a "prudent way to manage capital."

According to the filing, the bank has issued investors 185.5 million common shares, worth about $1.1 billion at Thursday's closing price of $5.80, and $998.1 million of senior notes. In return, the bank received preferred stock and trust preferred securities worth about $2.7 billion.

Bank of America said in the filing that it expects the exchange will increase a type of capital known as Tier 1 common by $1.88 billion.

Bank spokesman Jerry Dubrowksi declined to comment on whether the bank will issue the entire 400 million shares or $3 billion in debt.

Bank of America shares on Thursday closed down 1.7 percent at $5.80 amid continuing concern about the ability of European countries to pay their debts. The shares on Wednesday fell below $6 for the first time since early October.

(Reporting by Rick Rothacker in Charlotte, North Carolina; Editing by Bernard Orr)