UPDATE 2-Sun Bancorp joins banks lining up to repay TARP
(Adds details, company comments, background)
By Sweta Singh
BANGALORE, April 1 (Reuters) - Sun Bancorp (SNBC.O: Cotización) on Wednesday joined a rising number of U.S. regional banks that are repaying funds received under the government's Troubled Asset Relief Program (TARP).
Sun Bancorp had received $89 million as funds under the government's relief program and joins Evansville, Indiana-based Old National Bancorp ONB.N, Signature Bank (SBNY.O: Cotización) of New York, and California's Bank of Marin Bancorp (BMRC.O: Cotización) who have already repaid a total of $248 million.
"Since we don't need it, we view the repayment as an opportunity to support the government's efforts to create stimulus by giving these funds to another bank that needs the capital to maintain operations and increase lending," Thomas Geisel, chief executive, Sun Bancorp told Reuters in an email.
The move to repay funds as early as possible could undermine a key pillar of the Obama administration's financial recovery plan -- intended to stabilize the financial system, prevent a collapse of the banking system and bolster lending.
While the funds were mostly intended for banks that were weakened by the housing slump and the subsequent crash of credit markets, a significant portion of the $700 billion bailout ended up going to banks that described themselves as well-capitalized.
Now some of these banks with strong capital ratios are beginning to return the TARP funds to get out of restrictions like executive compensation caps imposed by the government.
Repayment means "less influence on your business model from the government," analyst Terry McEvoy of Oppenheimer & Co said. Continuación...