CIT told to submit capital plan to NY Fed
Lender CIT Group Inc
Regulators last month rejected the 101-year-old lender's request to issue government-guaranteed debt, prompting it to scramble to raise emergency funds from bondholders just months after it became a bank holding company and received $2.33 billion in bank bailout money.
The lender to small and medium-sized companies has been struggling amid spiraling loan losses after an ill-timed foray into subprime mortgages, and on Monday the lender again warned it might seek bankruptcy protection if various restructuring efforts including a tender offer for $1 billion in notes due on August 17 proved unsuccessful.
CIT said on Thursday it agreed to submit a plan to its regulator outlining how it would maintain sufficient capital at its Utah-based bank and the bank holding company.
CIT also promised to provide the Fed with a plan to improve management of its liquidity position within 15 days, according to details in the Federal Reserve enforcement notice.
The company would provide a credit risk management plan and review its system of setting aside allowances for loan and lease losses within 60 days.
Within 75 days, CIT also must submit a business plan to improve its financial condition and outline actions to strengthen its management and corporate governance.
Separately, New York-based CIT said its board of directors has adopted a tax plan to protect CIT's ability to use its net operating losses and other tax assets.
The Tax Benefits Preservation Plan will discourage people or groups from becoming 5 percent shareholders, something that CIT said could reduce the value of the tax assets.
Shares in CIT were up about 12.5 percent at $1.44 in afternoon trading on the New York Stock Exchange after trading as high as $1.53. CIT shares have fallen more than 65 percent since the start of the year.
(Reporting by Elinor Comlay, editing by Gerald E. McCormick and Robert MacMillan)
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