Capital One, Key Among 12 Banks Taking $28 Billion

Twelve regional U.S. banks, including SunTrust Banks Inc. and Capital One Financial Corp., accepted at least $28 billion in government cash as the Treasury rolled out the second half of its $250 billion package to shore up lenders and thaw frozen credit markets.

Treasury Secretary Henry Paulson is doling out cash to recapitalize struggling lenders and jump-start takeovers in an industry suffering from the worst housing crisis since the Great Depression. SunTrust, Capital One, KeyCorp and PNC Financial Services Group Inc. are among lenders that accepted cash in recent days by selling preferred shares to the government.

``This is just unprecedented,'' said BMO Capital Markets analyst Peter Winter. ``What the government has said is that you can't let the financial system fail, and if this doesn't work they'll come up with another plan.''

The U.S. capital infusions come as global governments do all they can to ensure the stability of banks. Kuwait's central bank said it will guarantee deposits at Gulf Bank KSC, which remains solvent after clients defaulted on currency derivatives contracts, the state-run Kuwait News Agency reported. Paulson already gave $125 billion to nine of the biggest U.S. lenders.

Some banks are raising money on their own. Mitsubishi UFJ Financial Group Inc., the Japanese bank investing $9 billion in Morgan Stanley, said it will sell as much as 990 million yen ($10.7 billion) of stock to replenish its capital. Japan's biggest bank may sell as much as 600 billion yen of common shares in the 12 months starting Nov. 4.

Niagara Falls, Beverly Hills

The latest U.S. banks to benefit from the government's Troubled Asset Relief Program, or TARP, spanned the nation, ranging from City National Corp., in Beverly Hills, California, to First Niagara Financial Group Inc., based in upstate New York near Niagara Falls. The banks were joined by State Street Corp., the world's largest money manager for institutions, which is selling a $2 billion stake. Northern Trust Corp., a custody bank that oversees $3.53 trillion, plans to sell the government a $1.5 billion stake.

``We're happy to do our part to support the financial and economic stability of the U.S.,'' Capital One spokeswoman Tatiana Stead said in an e-mailed statement. The McLean, Virginia-based bank, which is raising $3.6 billion, rose 3.3 percent in New York trading to $36.47 as of 10:13 a.m.

News of the infusions helped spur gains in U.S. financial stocks, as the 24-company KBW Bank Index jumped 4.5 percent. Fifth Third Bancorp, which expects $3.4 billion from the Treasury, surged as much as 20 percent. Regions Financial, which is selling a $3.5 billion stake, rose 17 percent, and Huntington Bancshares Inc. advanced as much as 16 percent.

Tennessee, Cleveland

Fifth Third, Ohio's second-largest lender, made no mention of previously announced plans to raise more than $1 billion selling non-core businesses.

First Horizon National Corp., Tennessee's largest bank, said Friday it received preliminary approval to receive about $866 million from the U.S. Treasury. PNC on Friday announced it was buying National City Corp. for $5.2 billion in stock after receiving $7.7 billion from the Treasury. Washington Federal Inc. and Valley National Bancorp said over the weekend they would receive a total of $560 million from the government. City National said it would sell $395 million in preferred stock and warrants.

Cleveland-based KeyCorp plans to sell $2.5 billion in equity. Huntington, of Columbus, Ohio, announced its application for $1.4 billion in a statement today.

Boost to Lending

The funds will help KeyCorp ``gain flexibility in managing our balance sheet'' and ``enhance our ability to lend to our relationship clients,'' Chief Executive Officer Henry L. Meyer said in a separate statement today.

The bank said that had the $2.5 billion capital increase been in place on Sept. 30, KeyCorp's Tier 1 ratio, measuring the ability to absorb losses, would have been about 10.76 percent, rather than 8.48 percent.

Another bank accepting funds was Comerica Inc. The Dallas- based bank, which also does business in Canada and Mexico, said today that it plans to sell $2.25 billion in preferred stock and warrants to the Treasury, boosting its Tier 1 ratio to 10.35 percent.