WASHINGTON, May 6, 2009 (AFP) - Bank of America will need to raise between 33.9 and 35 billion dollars in capital to maintain its financial stability, US media reported Wednesday.
After days of negotiations, the government informed the banking giant it needs 33.9 billion dollars, the New York Times said, citing a bank executive. The amount is greater than what executives think the bank needs, however.
"We're not happy about it because it's still a big number," said J. Steele Alphin, the bank's chief administrative officer. "We think it should be a bit less at the end of the day."
The Wall Street Journal meanwhile, citing people familiar with the situation, said US regulators told the Charlotte, North Carolina-based bank late Tuesday that it needs to address a roughly 35-billion-dollar capital shortfall.
Because the amount of capital needed exceeds what Bank of America could raise by selling more assets or shares to private investors, the bank may end up with no option but to convert government shares into common stock -- meaning the US government would become one of the bank's largest shareholders.
The federal government has already pumped 45 billion dollars in bailout cash into the ailing institution since the world economic crisis, which originated in the United States, started to unravel in October 2008.
The reports came ahead of results Thursday from "stress tests" conducted by US authorities on 19 top banks, including their capital adequacy levels.
The Journal has reported that 10 of the 19 banks subject to the tests may need to raise more capital.
The exact number of banks required to raise more funds has not yet been determined, the financial daily said, but those affected could include banking giants Wells Fargo, Bank of America and Citigroup.
The number of banks thought to need more funds had been 14 out of 19 at one point, the Journal said, citing sources familiar with the matter.
US banking regulators and the Federal Reserve are set to release results Thursday from stress tests of the 19 banks and estimates for further public aid to help boost the ailing economy.
The tests will cap a period of suspense that began when President Barack Obama's administration unveiled in February its overhaul of the bank bailout in a bid to restore stability to the financial system of the world's largest economy.
Fears surrounding Wells Fargo, Bank of America and Citigroup may have subsided, however, in light of the authorities' stress test efforts, the Journal said, noting that the three bank's stock prices have tripled since early March.
Bank-specific details are set to be unveiled Thursday after Wall Street closes for the night.