Regulators Will Not Force BofA to Raise New Capital

According to the Washington Post, the government will not require the nation’s largest bank – Bank of America (BAC) to raise any additional capital as a result of its stress test, although the firm will be asked to increase its holdings of common equity by about $35 billion.

From WaPo: The bank could meet that requirement by converting other forms of capital into common equity, including the government’s existing $45 billion investment in the company, a step that would not involve raising any new money,” WaPo said, citing people familiar with the matter.
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Citigroup, by contrast, will be required to raise several billion dollars in new capital…The company also will be required to increase its holdings of common equity by tens of billions of dollars.
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Finally, the government will declare that some banks have enough capital in general, and enough common equity in particular, and do not need to take further steps.

Banks that will receive a clean bill of health include J.P. Morgan Chase and Bank of New York Mellon, source said. Financial analysts say that Goldman Sachs and BB&T also are expected to get clean bills.

The government plans to announce the results of the stress tests on Thursday.

FDIC Chairwoman Sheila Bair said today that the release of the results of the stress tests undergone by the 19 largest banks will “be a confidence-instilling announcement.”