Major banks could get incremental capital from Visa Class B exchange program: analyst

Visa Inc.’s
V,
-2.55%
move to provide liquidity to bank owners of its Class B shares could create incremental capital for banks, Jefferies analyst Ken Usdin said Thursday in a research note. The Class B shares are now valued at about $96 billion, which could provide liquidity for banks at a time when financial firms are looking to build capital to meet balance sheet requirements being proposed by federal regulators, Usdin said. “The timing could be fortuitous,” Usdin said. However, it remains unclear if all shareholder classes will approve Visa’s proposal and how long the process could take. When Visa went public in 2008, JPMorgan Chase & Co.
JPM,
+1.94%
owned 23.1% of its Class B shares, Bank of America Corp.
BAC,
+1.11%
owned 11.5% and National City, which is now part of PNC Financial Services Group Inc.
PNC,
+2.72%,
owned 8%, Citigroup Inc.
C,
+1.82%
owned 5.5% and Wells Fargo & Co.
WFC,
+1.89%
and U.S. Bancorp
USB,
+1.62%
each owned about 5%. Over time, banks have been selling their Class B shares. JPMorgan Chase now owns about 37 million Class B shares and has sold 23 million. Bank of America said in a 2015 interview with The Wall Street Journal that is sold its stake over the course of several years. In the second quarter, PNC said its Class B shares were worth about $1.3 billion. JPMorgan stock was up 0.4% in premarket trades, while Bank of America was up by 0.5% and Wells Fargo was up by 0.1%.