UPDATE: Capital Roundup: BofA, Citi, Wells Fargo Need Funds
May 06 2009 - 4:50PM
Dow Jones News
Bank of America Corp. (BAC), Citigroup Inc. (C) and Wells Fargo
& Co. (WFC) were among a number of large U.S. banks that need
to raise more capital after the completion of the government's
stress tests, according to people familiar with the matter and
reports.
The government began informing the 19 banks tested by the
government late Tuesday about how much fresh capital they need to
withstand the economic downturn. The Federal Reserve is expected to
release the full report on Thursday after the stock market
closes.
It is expected that 10 of the banks that were tested may need
capital. JPMorgan Chase & Co. (JPM), American Express Co.
(AXP), Morgan Stanley (MS), Goldman Sachs Group Inc. (GS) and Bank
of New York Mellon Corp. (BK) won't need to raise more money to
shore up their balance sheets, according to people familiar with
the matter and reports.
BofA needs nearly $34 billion of capital to survive a worsening
recession, according to people familiar with the matter. The
Charlotte-based bank received $45 billion in capital from the
federal government under the Troubled Asset Relief Program, or
TARP.
Citi, one of the hardest hit U.S. banks since the credit crisis
peaked last October, will have to raise between $5 billion to $6
billion in extra capital, according a person familiar with the
matter. The move could decrease the government's stake in Citi,
which is expected to be about 36% when its preferred shares are
converted to common stock. The New York-based bank also received
$45 billion in TARP funds.
Wells Fargo needs $15 billion, according to reports. The San
Francisco-based bank received $25 billion from the government.
And Regions Financial Corp. (RFC) is also expected to need more
capital, according to a person familiar with the matter.
Analysts believe other banks that may need capital include Fifth
Third Bancorp (FITB), KeyCorp (KEY), PNC Financial Services Group
Inc. (PNC) and SunTrust Banks Inc. (STI). Others still left to
report include BB&T Corp. (BBT), Capital One Financial Corp.
(COF), State Street Corp. (STT), and US Bancorp (USB).
The tests weren't restricted to traditional banks. GMAC LLC may
have to raise as much as $11.5 billion of additional capital,
according to news reports. However, MetLife Inc. (MET) isn't
expected to need more capital, according to reports.
-By Joe Bel Bruno, Dow Jones Newswires; 201-938-4047;
joe.belbruno@dowjones.com