A $2 billion flood of preferred stock issues in recent weeks has hurt sales of National Westminster Bank's $250 million offering.
Richard Goeltz, group chief financial officer at Natwest, acknowledged that heavy supply slowed sales of the issue.
"If we had been perfectly prescient, we would have gotten the deal done earlier, before the other preferred stock deals had gotten to the market," he said.
Since mid-May, Chemical Banking Corp., Citicorp, Banco Santander, and Bankers Trust New York Corp. have sold a total of $870 million in preferred.
International Business Machines Corp. added to the pressure by issuing $1.1 billion in preferred.
Sold Through Goldman
On Wednesday, Natwest sold its issue of preferred through Goldman, Sachs & Co. with a dividend yield of 8.75%.
A number of investment bankers said the dividend was too low given the large supply of preferred issues.
"This deal could have worked if it was not launched on the heels of IBM, Citicorp, and Santander," said one market source.
PaineWebber Inc., which had been named as a co-manager when the deal was first marketed, dropped out of the deal, apparently due to a disagreement over pricing, sources said. A PaineWebber official declined to comment.
"One underwriter has withdrawn," Mr. Goeltz said. "I have not spoken with them, I don't know their reasons, but presumably they will give me a call."
Some other underwriters have sizable inventories of the stock left on their books. As a result, banks that want to tap the market in the near future may find reduced access or be forced to pay higher dividends.