The government said Tuesday it will auction 2.62 million warrants it received from Houston-based Sterling Bancshares Inc. as part of its effort to recoup costs of the $700 billion financial bailout.
The auction of the warrants will take place on Wednesday, the Treasury Department said. It set a minimum bid price of 85 cents per warrant. A warrant gives the purchaser the right to buy common stock at a fixed price.
The government obtained the warrants when it provided Sterling Bancshares with $125.2 million at the height of the financial crisis in December 2008. The bank repaid its bailout in May 2009.
Financial institutions have been eager to cut ties to the bailout program, known as the Troubled Asset Relief Program, or TARP, to escape various restrictions imposed on banks receiving support. Those include limits on dividend payments and executive compensation.
The government received the warrants as a bonus to taxpayers for rescuing the banks during the financial crisis.
By purchasing the warrants, holders have the right to buy an equal amount of shares of Sterling Bancshares at a price of $7.18 per share.
Sterling Bancshares stock closed in trading Monday at $4.87 per share. Over the past year, the bank's stock has ranged from a low of $4.50 a share to a high of $8.69 per share.
Last week, the government raised $2.97 million through an auction of 465,117 warrants of Cincinnati-based First Financial Bancorp. Those warrants sold for $6.70 per warrant.
© Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.