Huntington Bancshares tumbles on big equity raise

CHICAGO (Reuters) - Huntington Bancshares Inc (HBAN.O: Quote, Profile, Research) shares tumbled as much as 14.5 percent after the large U.S. midwest regional bank announced plans to raise $675 million of regulatory common equity to bolster capital.

The Columbus, Ohio-based lender said it may sell $350 million of equity, tender for some trust-preferred securities, adopt new accounting rules, and other steps. Most of the actions will take place this quarter, the bank said.

Huntington took $1.4 billion from the Troubled Asset Relief Program. It is one of the largest U.S. lenders not subjected to the recent government stress tests of banks' ability to withstand a deep recession.

The stock offering will be "at the market," like a recently completed $120 million offering, Chief Executive Stephen Steinour said on a conference call.

Many large banks have been selling stock this month because they need to after the stress tests, or to take advantage of a run-up in their shares before investor appetite wanes.

The KBW Bank Index of 24 large lenders has roughly doubled since early March.

Bank of America Corp (BAC.N: Quote, Profile, Research), Fifth Third Bancorp (FITB.O: Quote, Profile, Research), KeyCorp (KEY.N: Quote, Profile, Research) and Marshall & Ilsley Corp (MI.N: Quote, Profile, Research) are among lenders to sell or announce plans to sell shares in market transactions this month.

Jason Goldberg, an analyst at Barclays Capital, estimated that Huntington's equity offering alone would dilute holdings of existing shareholders by 17 percent.

Earlier this year, Huntington replaced its chief executive and slashed its quarterly dividend to a penny per share. Some of its problems stemmed from a now-restructured relationship with a troubled New Jersey mortgage specialist.