The Treasury Department plans to sell $381.5 million of preferred shares it holds in M&T Bank Corp., the largest bank still in the Troubled Asset Relief Program.

The offering — which was announced Thursday and has yet to be priced — will free the Buffalo company from Tarp after more than four years. M&T avoids having to hold its own offering, which would dilute shareholders of common shares.

M&T's reluctance to issue shares to repay Tarp is one of the key reasons the $80.8 billion-asset company has moved slowly to exit the program.

Acquisitions are a second reason M&T stayed in Tarp long after other healthy banks such as U.S. Bancorp (USB) and BB&T (BBT) got out.

M&T took $600 million in aid in 2008, and inherited another $151.5 million in its 2009 acquisition of Provident Bankshares in Baltimore. Wilmington Trust of Wilmington, Del., had $330 million in outstanding Tarp that M&T retired upon acquiring that company last year.

M&T redeemed $370 million of its own aid last year.

The company cannot comment on active offerings, an M&T spokesman said Thursday.

M&T is the largest bank by assets that still holds Tarp, and its $381.5 million debt is the fifth-largest outstanding Treasury investment in banks.

The top four, according to the Treasury: Synovus Financial (SNV) of Columbus, Ga., which owes $967.9 million; Popular (BPOP) of Hato Rey, Puerto Rico, which owes $935 million; Zions Bancorp (ZION) of Salt Lake City, Utah, which owes $700 million; and First BanCorp, of San Juan, Puerto Rico, which owes $400 million.

The Treasury in recent months has sold stakes in about 20 banks as it seeks to recoup its investments and retire Tarp.

The M&T offering is to involve two tranches of M&T securities: $230 million of Series A preferred shares and $151.5 million of Series C preferred shares.

The Treasury still holds warrants to purchase 1.6 million in M&T common stock. Banks may buy back warrants, or Treasury can auction them.

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