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BMO free and clear of raising equity for M&I

Bank of Montreal

Fernando Morales/Fernando Morales/The Globe and Mail

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.

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About the Author
Reporter and Streetwise columnist

Tim Kiladze is a business reporter with The Globe and Mail. Before crossing over to journalism, he worked in equity capital markets at National Bank Financial and in fixed-income sales and trading at RBC Dominion Securities. Tim graduated from Columbia University's Graduate School of Journalism and also earned a Bachelor in Commerce in finance from McGill University. More

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