The largest US bank by deposits, Bank of America, says it is "well on its way" to meeting the required "capital buffer" issued after "stress tests", having raised almost $26 billion towards the official Federal Reserve target of $33.9 billion.
AFP - Ailing Bank of America said Wednesday it has raised almost 26 billion dollars and was close to meeting its Federal Reserve-mandated requirement for a capital buffer.
The US banking giant said its was "well on its way" to reaching the Fed target of 33.9 billion dollars in fresh capital authorities said it needs as a buffer in the event of a sharper downturn in the recession-mired economy.
Bank of America said it had taken a number of steps to raise the required capital.
"Combined, these initiatives have raised almost 26 billion dollars, or 76 percent of the total, toward the (Federal Reserve) buffer of 33.9 billion dollars," it said.
Bank of America, the largest US bank by deposits, was among 19 major banks that recently underwent "stress tests" by authorities to determine their capacity to withstand more severe shocks from the global financial and economic crisis.
The Charlotte, North Carolina-based bank said it would meet the capital demands by selling assets and other actions in order to repay the US Treasury.
The federal government has already pumped 45 billion dollars in bailout cash into the ailing institution since the financial crisis, which originated in the United States, accelerated in October 2008.
BofA announced last week it had raised of 13.5 billion dollars through issuing 1.25 billion shares in a common stock offering.
It has also sold a third of its stake in China Construction Bank Corp (CCB), one of the largest Chinese banks, for 7.3 billion dollars.
Those initiatives benefited Tier 1 common capital, a measure of a bank's financial strength, by 1.8 billion dollars by reducing the deferred tax asset deduction, the company said in a statement.
In addition, Bank of America said it had struck agreements "with certain holders of (non-government) perpetual preferred shares" to exchange their holdings of some 5.9 billion dollars of preferred stock into approximately 436 million shares of common stock.
Those actions agreements resulted in a total benefit to Tier 1 common capital of 5.9 billion dollars.
Date created : 2009-05-27