Wells Fargo & Co , the fourth-largest U.S. bank, announced on Thursday a $6 billion common stock offering, as the bank faces regulatory stress tests to determine whether it needs to strengthen its capital.

The stock issue will be priced on Friday morning at between $20.50 and $22, said a source familiar with the situation who was not authorized to speak publicly.

While the issue would be between 11.1 and 17.2 percent below Thursday's closing price of $24.76, it would be above Wells Fargo's stock price for most of this year.

The results of government stress tests of the ability that the 19 largest U.S. banks can weather a deep recession will be released on Thursday at 5 p.m. EDT (2100 GMT).

The Wall Street Journal reported Wells Fargo could need to shore up its capital by up to $15 billion.

The San Francisco-based bank -- in which Warren Buffett's Berkshire Hathaway Inc is the largest shareholder -- took $25 billion of capital from the government's Troubled Asset Relief Program last fall.

While Wells Fargo said when it accepted the TARP money that it did not need the funds, its capital ratios are now lower than those of many rivals.

On December 31, Wells Fargo bought Wachovia Corp for $12.5 billion, and immediately wrote down $37.2 billion of riskier Wachovia loans.

Wells Fargo's Tier-1 capital ratio, including the $25 billion, ended March at 8.28 percent, above the 6 percent regulatory minimum but below the double-digit ratios that many rivals maintained.

Its ratio of tangible common equity to tangible assets was 3.28 percent; many analysts prefer to see 5 percent.

J.P. Morgan Securities Inc and Wachovia Securities are joint bookrunning managers for the offering.

Wells Fargo shares fell 3.6 percent to $23.87 in after-hours trading. The stock ended down 7.75 percent on Thursday on the New York Stock Exchange, and is down 16 percent this year.

(Reporting by Jonathan Stempel, Phil Wahba, and Juan Lagorio; Editing by Bernard Orr)

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