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. The new issues could be used to redeem outstanding issues that pay higher yields.
"We are going to see a lot of banks refinance debt or preferred stock that can be called," said Dennis Shea, an analyst with Morgan Stanley & Co. "In all likelihood, Bank of New York is going to try to save money by issuing debt at a low rate to replace outstanding issues."
The banking company has $437 million in debt that will come due in the next five years.
Also outstanding is a $75 million issue of preferred stock with a variable rate that can be called in 1993. The stock paid a 7.05% dividend in September, which is low compared to other preferred issues.
Still, banks are seeking to replace adjustable-rate debt with low-cost fixed rates when possible.
"We intend to be well capitalized at all levels," said a spokesman.
The shelf registration also raises the issue of whether Bank of New York is planning an acquisition.
J. Carter Bacot, Bank of New York's chairman, has told analysts that he is considering a sizable acquisition. Bank of New York has not done a major deal since acquiring Irving Bank Corp. in 1989.
"I don't think they are looking to buy anything big right now," said Mr. Shea. "Right now, the stock valuation isn't sufficient and the deal would be dilutive." Bank of New York's stock trades at 118% of book value, giving the bank less buying power than some other big banks.