by Christopher Freeburn | September 7, 2012 11:01 am
SunTrust Banks (NYSE:STI) announced that it has sold 59 million shares of Coca-Cola (NYSE:KO) for $1.9 billion.
On the news, shares of SunTrust jumped about 5% in Friday morning trading.
One of SunTrust’s predecessor banks first acquired shares in the iconic soft drink and snack food company back in 1919 as part of Coca-Cola’s initial public offering, Reuters noted.
Under the terms of a 2008 agreement, SunTrust planned to dispose of 60 million Coca-Cola shares by the end of 2015. However, the bank has accelerated that time table to due increased pressure to boost reserves from both U.S. and European regulators.
In March, SunTrust failed financial stress tests administered by the U.S. Federal Reserve, meant to assess its ability to remain solvent during economic turbulence.
The bank said it sold 59 million of its shares and donated one million more to a charity. Without the annual dividends from the Coca-Cola stock, the bank’s annual interest income will decline by $40,000.
Additionally, the bank announced that it’s third-quarter earnings will be $750 million lower as its records charges of $375 million relating to mortgage buybacks from Fannie Mae and Freddie Mac, and $350 million stemming from real estate loan sales.
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