Bank on Montreal has freed itself of having to issue any equity to support its $4.1-billion (U.S.) purchase of Marshall & Ilsley Corp.
Back in December when the deal was first announced, BMO said it would likely need to raise about $800-million in common stock before the transaction closed to keep its Tier 1 capital ratio in check. That number was then lowered to $400-million when the bank released its first quarter earnings.
On Tuesday the need for that $400-million was wiped out. In an announcement that cleared the bank of all regulatory hurdles for the purchase, BMO also said it no longer needs to raise any common equity because its capital base has remained strong.
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That's good news, as the deal is closing in about two weeks, but the market largely expected this would be the case, noted Barclays Capital analyst John Aiken, so not much changes.