Bank of New York Drops Share Offering
Bank of New York Co. withdrew its planned stock offering, less than three weeks after it had filed to issue new shares.
The proposed offering would have been the first by a major New York bank since 1989.
A spokesman for the bank said adverse market conditions prompted the move. "The market has not been strong since we filed on Nov. 15," he said. That day, the Dow Jones industrial average plummeted 120 points, and it has not recovered.
"It doesn't surprise me" that the bank withdrew its offering, said J. Richard Fredericks, an analyst at Montgomery Securities. "It's a pretty tough environment for banks out there."
The day it announced the stock offering, Bank of New York lost $202 million in market value when its share price dropped nearly $3, to $31.
At the opening Monday, Bank of New York's stock was at $28.25 a share, but the price rose $1.75, to $30, after the company announced it would not issue the new shares.
"Bank of New York was not crazy about doing the deal in the first place, but it figured the market was strong," said a capital markets specialist.
When the bank's stock price fell, it lost what enthusiasm it had for the offering, he said.
Bank of New York took the extra step of withdrawing its filing with the Securities and Exchange Commission when it decided not to go through with the stock offering.
It could have left the filing there and amended it if the banking company later decided to retest the market.
Withdrawing a filing can reassure investors worried about dilution of their holdings that a company does not soon intend to issue stock.
Goldman, Sachs & Co. would have been lead manager of the offering. A spokesman for the firm declined to comment on the withdrawal.