Citi, BofA may need more capital after stress tests.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of : Citigroup Inc may have to raise more capital after receiving preliminary results of its stress test from U.S. regulators, people familiar with the matter said, while The Wall Street Journal reported Bank of America
Bank of America (NYSE: BAC TYO: 8648 ) is the largest commercial bank in the United States in terms of deposits, and the largest company of its kind in the world. Corp may need billions of new capital. The reports on Tuesday triggered a new round of guesswork and analysis on Wall Street as investors tried to figure out which other banks might face pressure to raise capital. Wells Fargo Wells Fargo armored carriers of bullion. [Am. Hist.: Brewer Dictionary, 1147] See : Protectiveness Wells Fargo company that handled express service to western states; often robbed. [Am. Hist. & Co s shares fell as much as 5 percent, while Bank of America and Citigroup shares fell as much as 10 percent and 7 percent, respectively. Later on Tuesday, the Journal reported that Citi had asked the U.S. Treasury U.S. Treasury Created in 1798, the United States Department of the Treasury is the government (Cabinet) department responsible for issuing all Treasury bonds, notes and bills. Some of the government branches operating under the U.S. Treasury umbrella include the IRS, U.S. for permission to pay special bonuses to employees. The bank is also looking into ways to free its energy-trading unit, Phibro, from pay restrictions and is considering a spinoff into an independent hedge fund hedge fund, in finance, a highly speculative, largely unregulated investment device. Originating in the 1950s, the funds "hedge" by offsetting "short" positions (borrowing a security and then selling it at a higher price before repaying the lender) against "long" or bringing in outside investors, the paper reported. Bank of America may need to raise as much as $70 billion to maintain an acceptable tangible common equity ratio Eoe1/4" a measure of capital strength -- if unemployment rises, analysts at FBR FBR Friedman, Billings, Ramsey Group, Inc. (investment firm) FBR Fast Breeder Reactor FBR Federal Benefit Rate FBR Foundation for Biomedical Research FBR Foundation for Blood Research FBR Fluidized Bed Reactor wrote in a report on Tuesday. Both Citi and Bank of America posted better-than-expected first-quarter results, but analysts have questioned whether the improvement can last given looming credit losses and the surprisingly high trading profits and one-time gains that boosted the results. "If you were to ask people last week which banks would most likely have to raise more capital, I think Bank of America, Citigroup would have been the common answer," said Walter Todd, a portfolio manager at Greenwood Capital Associates. Each bank has received $45 billion of capital injections under the U.S. government s Troubled Asset Relief Program, more than any other major bank. But both banks are also likely to face substantially more consumer credit losses as U.S. unemployment reaches its highest level in a generation. Bank of America averaged more than $600 billion of consumer loans during the first quarter, while Citigroup averaged more than $500 billion. These loans will generate interest income, but any interest income may be overwhelmed by credit losses, analysts said, and Citigroup and Bank of America only have small cushions to absorb these losses by one measure. Citi s tangible common equity ratio was 1.66 percent at the end of the first quarter. Converting preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. into common, coupled with the $2.7 billion sale of a stake in Smith Barney brokerage unit into a joint venture with Morgan Stanley, should raise its tangible common equity ratio to 4.97 percent, Fox Pitt Kelton analysts wrote in a report two weeks ago. Bank of America s tangible common equity ratio is about 1.8 percent. If unemployment rises as high as 12 percent, it would need $60 billion to $70 billion to maintain its tangible common ratio above 3 percent -- expected to be the government s required level for banks -- according to analysts at FBR Capital Markets. Muscat Muscat, Maskat, or Masqat (all: mŭs`kăt, mŭs`kət), city (1993 pop. 533,774), capital of Oman, SE Arabia, on the Gulf of Oman. It is flanked by rugged mountains. Press and Publishing House SAOC SAOC Studies in Ancient Oriental Civilization SAOC Sunbeam Alpine Owners Club (UK) SAOC Sector Air Operations Center SAOC South African Orchid Council SAOC Submariners Association Of Canada (Gloucester, ON, Canada) 2009 Provided by Syndigate.info an Albawaba.com company |
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