M&T Bank Corporation
) announced its decision to redeem all of its issued and
outstanding 8.5% Enhanced Trust Preferred Securities (TruPS).
Notably, the securities were issued by M&T Capital Trust IV.
The redemption is scheduled on Feb 27, 2014.
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Along with this, M&T Bank will redeem the entire junior
subordinated debt securities held by the aforesaid trust. The
present outstanding total principal amount in TruPS is $350
Further, M&T Bank has fixed the price of redemption of the
TruPS at $25.00 per unit that reflects 100% of the liquidation
amount. The company will pay this redemption price along with any
distribution outstanding and due on the securities up till the
date of redemption to its shareholders.
Bank of New York Mellon Corp.
) is acting as the paying agent for the redemption process.
Recently, on Dec 30, 2013,
Fifth Third Bancorp
) fully redeemed its outstanding 6.50% TruPS issued by Fifth
Third Capital Trust IV.
TruPS redemption is viewed as an encouraging step for banks. It
helps reducing the burden of interest expenses, as these
securities demand higher rates than other securities and often
the banks replace TruPS with equity or other low-cost debt.
Further, according to the Dodd-Frank Act, banks are no longer
allowed to consider these securities as regulatory capital
M&T Bank carries a Zacks Rank #3 (Hold). Among major regional
Bank of America Corp.
) is worth considering with carrying a Zacks Rank #2 (Buy).