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BofA, Citigroup Need Nearly $85bn in Capital

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6 May 09 | FT

Citigroup and Bank of America have emerged as the US banks with the biggest capital shortfalls after the completion of the government’s “stress tests”, with Citi projected to require more than $50bn in fresh equity and BofA nearly $35bn.

Citigroup and Bank of America have emerged as the US banks with the biggest capital shortfalls after the completion of the government’s “stress tests”, with Citi projected to require more than $50bn in fresh equity and BofA nearly $35bn.

Bankers said BofA’s capital need was more pressing because Citi had already agreed to bolster its balance sheet by converting preferred shares owned by the government and other investors and selling non-core businesses.

People close to the situation expect Citi to have to raise less than $10bn in extra capital, and possibly as little as $6bn, through the expansion of its planned conversion of preferred shares.

The move could slightly decrease the government’s stake in Citi, which was expected to be about 36 per cent under the original conversion plan.

The results of the government’s tests will be announced on Thursday. >>>

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Written by Editors

6 May 2009 at 2:55 pm

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