KeyCorp, Huntington Get Treasury Funding

KeyCorp(KEY Quote) said it plans to bolster its capital position by $2.5 billion by participating in the Treasury's capital purchase program, while Huntington Bancshares (HBAN Quote) said it will get an injection of $1.4 billion from the U.S. government.

KeyCorp. said Monday it plans to raise capital by issuing senior preferred stock and warrants to the Treasury Department. The closing of the transaction is expected within 30 days.

"With this move, we further elevate our position of strength, gain flexibility in managing our balance sheet, enhance our ability to lend to our relationship clients, and enable continued investments in our businesses," said CEO Henry Meyer in a statement.

Huntington said the Treasury Department intends to purchase $1.4 billion of newly issued preferred equity stock. The preferred stock will carry a 5% coupon for five years, and 9% thereafter. In addition, the Treasury Department will receive warrants to purchase shares of Huntington common stock.

Huntington said the investment will add about 3 percentage points to its regulatory capital ratios, so that its Tier 1 capital ratio will increase to 11.9%.