Ten major US banks need to raise a total of 74.6 billion dollars for "capital buffers" in the event of a deeper economic slump under "stress tests" unveiled Thursday by US regulators.
Federal Reserve chairman Ben Bernanke said the results "should provide considerable comfort to investors and the public" despite the need for new capital in 10 of the 19 banks subjected to the process.
The central bank, which conducted the tests at the request of the Obama administration, said they showed the banks can withstand an adverse economic scenario but will be required to raise fresh capital to boost their reserves against losses.
Treasury Secretary Timothy Geithner said in a statement the tests "will help replace the cloud of uncertainty hanging over our banking system with an unprecedented level of transparency and clarity."
Among the 19 banks tested, Bank of America had the largest need at 33.9 billion dollars, followed by Wells Fargo with 13.7 billion.
Bernanke said nearly all the banks have sufficient capital "to absorb the higher losses envisioned under the hypothetical adverse scenario."
But he noted the 10 firms judged to have shortfalls "need to enhance their capital structure to put greater emphasis on common equity, which provides institutions the best protection during periods of stress."
GMAC, the former finance arm of General Motors, was seen as needing 11.5 billion while Citigroup needed 5.5 billion. The others included Regions Financial 2.5 billion dollars, SunTrust 2.2 billion, KeyCorp 1.8 billion, Morgan Stanley 1.8 billion, Fifth Third 1.1 billion and PNC 600 million.
Those not in need of new capital were American Express, BB&T, Bank of New York Mellon, Capital One, Goldman Sachs, JPMorgan Chase, MetLife, State Street and US Bancorp.
Some banks immediately announced plans to raise new capital through share offerings or by exchanging some preferred shares for common stock, which is seen as a better buffer.
Wells Fargo said it would launch an offering of billion dollars of common stock.
Morgan Stanley said it had "commenced a public stock offering of two billion dollars" and would seek to repay the US Treasury's investment "as soon as possible."
Morgan Stanley also said it would offer three billion dollars in bonds not guaranteed by deposit insurance.
Bank of America said it would meet regulator demands through sales of assets and other actions that allows it to repay the US Treasury.
Bank of America said it "intends to sell common stock and/or convert existing privately held preferred stock into common shares" to meet the requirement for core capital.
It has already announced it will sell First Republic Bank "and is considering the sale of several other business units including Columbia Management," the statement said. "It may also consider several joint ventures."
"Our intention will be to reach the government's target on our own without exchanging any of the current US investment in Bank of America into mandatory convertible preferred stock," said Joe Price, chief financial officer.
Bernanke pointed out that the Treasury "stands ready to provide whatever additional capital may be necessary to ensure that our banking system is able to navigate a challenging economic downturn."
Marai
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