WASHINGTON, D.C. — The Treasury Department has received a record $1.54 billion from the sale of warrants it received from Bank of America as part of the support it provided during the financial crisis.
The Treasury said Thursday it sold 272.17 million warrants in an auction held because Bank of America and the government could not agree upon an acceptable price. Warrants are financial instruments that allow the holder to buy stock in the future at a fixed price.
The $1.54 billion total is the largest amount raised from a single institution from the sale of warrants as part of the government’s $700 billion financial rescue effort.
The amount raised in the auction exceeds the $936.1 million raised from a December auction of JPMorgan Chase & Co. warrants and the $1.1 billion raised from the sale of Goldman Sachs warrants.
Goldman Sachs bought back its own warrants after the company and Treasury were able to agree upon a price. The warrant auctions are being held in cases where the government and the financial institution are not able to agree upon a price.
Treasury held the first three warrant auctions last year. Bank of America was the first of four auctions that are scheduled to be held this month.
Treasury split the Bank of America warrants into two groups representing the two blocks of support Bank of America, based in Charlotte, N.C., received during the height of the financial crisis in late 2008 and early 2009.
Treasury sold 150.38 million warrants labeled “A warrants,” with a minimum bid price of $7 per warrant. It received a price of $8.35 for each for those warrants. Purchasers have the right to buy a share of Bank of America stock for $13.30 for the life of the Group A warrants, which will expire on January 2019.
Treasury set a minimum bid price of $1.50 for the 121.79 million in Group B warrants, sold Thursday for a price of $2.55. Purchasers have the right to buy Bank of America stock at $30.79 through the life of these warrants which will expire in October 2018.