Bank of America to need $34 billion in capital: source
Bank of America has been deemed to need an additional $34 billion in capital, according to the results of a government stress test, a source familiar with the results said on Tuesday, according to Reuters.
A Bank of America spokesman declined comment.
The amount is far higher than published reports had speculated the largest bank might need. It is certain to increase the pressure on Chief Executive Kenneth Lewis, whom shareholders ousted as chairman last week.
It may also unnerve investors who had hoped the results of the stress tests on Bank of America and 18 other banks might show the industry was in less dire condition than had been feared. Shares of major U.S. banks have nearly doubled since bottoming out in early March.
U.S. equity market futures extended losses late on Wednesday and the yen gained following the news.
The government has spent the last three months conducting stress tests on the 19 largest U.S. banks to determine their revenue, losses and capital needs, should economic conditions deteriorate even further than many economists' estimates.
Officials plan to release results of the tests on late Thursday, and are expected to reveal both aggregate figures and the results of the examinations on the 19 institutions' holding companies.
Bank of America has been at the top of the list of banks believed to need more capital, as it is facing significant credit losses and a challenging combination with Merrill Lynch & Co.
The $34 billion figure more than triples previously published reports of Bank of America's capital needs.
The bank's shareholders voted to oust Lewis last week as chairman of the board, possibly laying the groundwork for his eventual departure from the company.
The bank has already received $45 billion in capital from the federal government.
The Federal Reserve and Treasury declined comment.
Most of the 19 U.S. banks being stress-tested intend to hold press conferences on Friday to explain the results of the government's assessments, the source said, adding that many of the banks are in the process of crafting capital recovery plans.