Financial firms are raising less capital as domestic and international concerns abound.
Capital raises for financial companies fell 50% from the first quarter and 26% from a year earlier, according to the KBW Capital Tracker released Thursday. The estimated $13 billion raised during the second quarter was the lowest second-quarter tally in the last three years.
The first quarter is historically a peak for raising funds, but the steep drop since April shows that there substantial concerns about the U.S. economy, political direction and the European debt crisis. Those developments have also intensified fear among bankers about share dilution should they test equity markets.
Only 77 financial companies raised capital during the second quarter compared to 99 a quarter earlier. Capital raising in June was the worst month to date this year, as financial firms raised just $3.4 billion compared to $13.7 billion in April, the year's peak.
The report noted that the first quarter did feature several large capital raises. Capital One Financial (COF) raised $1.3 billion and Regions Financial (RF) raised $900 million in the first quarter.
Most of the recently completed capital raises involved banks that have either used the funds for an acquisition, a mutual-to-stock conversion, Tarp redemption. One of the largest ones last month involved Oriental Financial Group (OFG) in Puerto Rico, which raised $84 million to help it buy the Puerto Rican operations of Spain's Banco Bilbao Vizcaya Argentaria.
Of the estimated $13 billion raised by financials in the second quarter, more than half involved equity or equity-linked offerings while 45% was through non-convertible preferred stock.