BankAmerica's Repurchase Plan Gets Vote of Confidence from S&P

BankAmerica Corp.'s credit ratings were reaffirmed Tuesday by Standard & Poor's Corp., following the announcement that the banking company would repurchase about 11% of its shares.

The bank said late Monday it would buy up to $1.9 billion of its common stock and $500 million of its preferred stock, in one of the largest repurchase programs announced in recent months.

Despite the potential capital outlay for the repurchases, Standard & Poor's reaffirmed BankAmerica's rating and kept the credit outlook positive. The bank is likely to retain momentum in its revenue growth, said Tanya Azarchs, a director at Standard & Poor's.

Prior to the buyback, BankAmerica has a 7.2% Tier 1 risk-adjusted capital, which puts its debt below that of many other banking corporations.

Ms. Azarchs believes BankAmerica will retain its current risk-adjusted capital level through the year as it goes through the first stage of the buyback.

Analysts said the bank was reacting to lackluster performance of its stock.

"I think they wanted to respond to some shareholder frustration, given that the stock price has been in a narrow range for the past couple of years," said Mark C. Alpert, a bank analyst at Alex. Brown & Sons Inc.

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