Surprise, surprise!
Bank of America, Citigroup may need more capital
WASHINGTON (AP) - Bank of America Corp. (BAC) (BAC) and Citigroup Inc. (C) (C), which have each received $45 billion in government bailout funds, have been told by regulators that "stress test" results show they may need to raise additional capital, The Wall Street Journal said Tuesday.
Charlotte, N.C.-based Bank of America is looking at a shortfall in the billions of dollars, the paper said, citing people familiar with the situation. Both banks plan to rebut the preliminary findings, according to the paper, with Bank of America expected to respond Tuesday ahead of its shareholder meeting Wednesday.
Citigroup declined to comment; Bank of America officials weren’t immediately available to comment.
As executives of the nation’s largest banks review their stress-test results, even the top performers are lobbying regulators to raise their scores before the numbers are finalized Friday.
Fed officials told reporters Friday that all 19 banks that took its "stress tests" will be required to keep an extra buffer of capital reserves beyond what is required now in case losses continue to mount. That would mean some banks will likely have to raise additional cash. But the Fed stressed in a statement that a bank’s need for more capital reserves to meet the requirements should not be considered a measure of the "current solvency or viability of the firm."
