Sorting Through Banks' Rush to Raise Capital

Banks eager to repay government bailout funds and those looking to plug capital holes now that the stress tests are over have been flooding the market with stock offerings as a way to raise capital.

And apparently, institutional investors, including mutual funds, pension funds and asset managers, want in. But it could also depend on the bank.

"Demand seems huge," says Tim Ghriskey, the chief investment officer for Solaris Asset Management.

"I don't know [if it's] there for absolutely every bank," Ghriskey says, "but I think there is a general feeling that the market has bottomed, that the financial crisis is being solved and that there is value here in these names."

At least four of the nine banks that were told they did not need to raise additional capital according to the Federal Reserve's stress test results said in the past few days that they were commencing stock offerings in order to repurchase the preferred stock and warrants issued to the Treasury Department under Treasury's Troubled Asset Relief Program.

The Bank of New York Mellon (BK Quote) boosted its original offering from $1 billion to $1.2 billion on Tuesday.

After announcing late Monday that it planned a common stock offering in which the proceeds would be used to repay TARP, the trust bank priced 42 million shares of common stock at $28.75 a share. Shares closed Monday at $29.55.