Bank of America Corp. and Citigroup Inc., 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. Bank of America declined to comment.
Citigroup said in a statement, "Until the results of the stress tests are announced, our regulators have prohibited all financial institutions, including Citi, from making any comments related to the stress tests." A Citi spokesman added that the bank is continuing with its plan to exchange debt for equity and shed assets as part of a program to further bolster its capital position. Citi has reached a basic agreement to sell its Japanese brokerage unit, Nikko Cordial, to Sumitomo Mitsui Financial Group Inc. for 500 billion yen ($5.2 billion), according to The Nikkei business newspaper. Citi declined to comment on the potential sale of the unit. Shares of Citigroup fell 18 cents, or 5.9 percent, to $2.89 in morning trading. Bank of America shares declined 59 cents, or 6.6 percent, to $8.33. Treasury Department spokesman Andrew Williams said Treasury officials would not comment on whether regulators told Bank of America and Citigroup they may need to raise more capital. |
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