US gives $35b in cash to 19 banks

Stakes part of bid to loosen credit

NEXT ROUND OF RELIEF Treasury Secretary Henry Paulson had already given $125 billion to recapitalize nine of the nation's biggest lenders.

NEW YORK - At least 19 regional US banks, including SunTrust Banks Inc. and Capital One Financial Corp., accepted $35 billion in government cash as the Treasury rolled out the second half of its $250 billion package to shore up lenders and thaw frozen credit markets.

Treasury Secretary Henry Paulson is doling out cash to recapitalize struggling lenders and jump-start takeovers in an industry suffering from the worst housing crisis since the Great Depression. SunTrust, Capital One, KeyCorp, and PNC Financial Services Group Inc. are among regional lenders that have agreed to take cash so far by selling preferred shares to the United States.

"This is just unprecedented," said BMO Capital Markets analyst Peter Winter. "What the government has said is that you can't let the financial system fail, and if this doesn't work they'll come up with another plan."

The capital infusions come as governments worldwide do all they can to ensure the stability of banks. Kuwait's central bank said it will guarantee deposits at Gulf Bank KSC, which remains solvent after clients defaulted on currency derivatives contracts, the state-run Kuwait News Agency reported. Paulson already gave $125 billion to nine of the biggest US lenders.

Some banks are raising money on their own. Mitsubishi UFJ Financial Group Inc., the Japanese bank investing $9 billion in Morgan Stanley, said it will sell up to $10.7 billion of stock to replenish its capital.

The latest US banks to benefit from the government's Troubled Asset Relief Program spanned the nation, ranging from City National Corp., in Beverly Hills, Calif., to First Niagara Financial Group Inc., in upstate New York near Niagara Falls. The banks may be joined by life insurance companies, some of which are now in talks with the government about potential Treasury investments, said Jack Dolan, spokesman for the American Council of Life Insurers in Washington.

Dolan declined to say which companies are involved in the talks. Spokesmen for MetLife Inc., the biggest US life insurer, and number two Prudential Financial Inc. declined to comment yesterday. Most US property and casualty insurers won't participate, according to a statement yesterday from Evan Greenberg, the chief executive of Ace Ltd. and chairman of the American Insurance Association.

Other financial firms participating in the program included State Street Corp., which is selling a $2 billion stake. Northern Trust Corp., a custody bank that oversees $3.53 trillion, plans to sell the government a $1.5 billion stake.