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Report: At least six large US banks need more capital
Published in Saudi Press Agency on 29 - 04 - 2009

At least six of the 19 largest US banks need more capital to remain healthy through the recession, according to leaked information from the two-month stress test carried out by the
nation's bank regulators, dpa quoted Bloomberg financial news service as reporting today.
The infusions could come from extra cash injections from the
government, but more likely from converting preferred shares to
common equity, the report said, citing people close to the situation.
Last Friday, regulators gave private briefings to the 19 banks -
all of them with more than 100 billion dollars in assets - about the
results of the two-month review of their financial health. The
results won't be released to the public until Monday.
The firms include JPMorgan Chase & Co, Wells Fargo & Co., Bank of
America and Citigroup.
Under the plan, banks which are found short of capital could be
forced to sell ownership stakes to the US government. The delay until
Monday gave banks time to challenge the results. Bloomberg reported
that appeals have been filed by Citigroup Inc. and Bank of America
Corp.
Seeking to reassure nervous investors, the Federal Reserve said
last week that most US banks have capital levels ""well in excess of
the amounts required to be well capitalized."
But it noted that there was "heightened uncertainty" about the
future course of the US economy and it was prudent for large banks
"to hold additional capital to provide a buffer against
higher losses than generally expected."
Regulators are looking for banks to have enough capital for the
next two years to keep credit lines flowing.
The test has caused jitters among investors over fears the
programme could end up with the government nationalizing banks. Banks
are also resisting suggestions that the government could limit
managers' salaries and bonusses, even as public outcry grows over
bonusses paid out of government bail-out money last year.
Both the US government and the Federal Reserve have pumped
unprecedented hundreds of billions of dollars into struggling US
banks as they try to keep their heads above a flood of failed
mortgages.


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