Investment banking veteran and Lazard Ltd. (LAZ) Deputy Chairman Gary Parr said global financial institutions may need to raise another $600 billion in capital to recover from the credit crises.
“There are a lot of financial institutions that still need to raise money,” Parr said today in an interview on Bloomberg Television. “It’s measured in hundreds of billions of dollars. Arguably it’s around $600 billion on a global basis that still needs to be raised.”
Global financial firms have already raised $1.5 trillion to recover from the credit crises after racking up more than $1.7 trillion of writedowns and credit losses since the middle of 2007.
Wells Fargo (WFC) and Citigroup (C) sold $29 billion in stock this week, seeking to wipe away the tarnish of U.S. government bailout funds and keep pace with its rivals. Earlier this month, Bank of America (BAC) sold more than $19 billion of equity as part of its exit from TARP. The offering was the biggest yet in a year that has seen over 100 U.S. banks sell stock to strengthen their capital
Banks in the U.S. and the U.K. have raised $70 billion in the last 10 days, according to Parr.
“The risk is the market is going to get tired of buying these stocks,” Parr said. “They just keep coming and keep coming. There’s just a lot of supply hitting the market. There’s more to come and a lot more to come.”