Business NEWS
Bank of America and Citigroup 'must raise billions in extra capital'
By Amarendra Bhushan for CEOWORLD Magazine Updated:April 28, 2009
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U.S. regulators have told Bank of America Corp. and Citigroup Inc. that the banks may need to raise more capital based on early results of the government’s so-called stress tests of lenders, The Wall Street Journal reported.
The capital shortfall amounts to billions of dollars at Bank of America. Bank of America and Citigroup have been the highest-profile problem children in recent months, but it is unlikely that they are the only banks the Federal Reserve has determined might need more capital.
- It is likely that Citigroup and BofA are not the only banks the Federal Reserve has determined might need more capital.
- The US government conducted the stress tests in an attempt to identify which financial institutions are well-positioned to ride out the slump and which are too burdened by toxic assets and bad debts.
- Stocks in Europe and Asia fell and U.S. futures retreated on concern that Bank of America Corp. and Citigroup Inc. will need more capital.
- The pan-European DJ Stoxx 600 index was down 2.4% at 191.81 at 0745 GMT. London’s FTSE 100 index was 2.1% lower at 4079.61, Frankfurt’s DAX index was down 2.6% at 4575.52 and Paris’s CAC-40 index was 2.5% lower at 3024.43.
- Executives at both banks are objecting to the preliminary findings and are planning to respond with detailed rebuttals, these people said, with Bank of America’s appeal expected by today.
- Citigroup has already received $45 billion in funding from the US Government.
- BoA has received $20 billion by the Government to offset massive losses at Merrill Lynch.
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