Citi, BofA reportedly told to boost capital

Early results of bank stress tests indicate the troubled banks need more capital in case economic conditions worsen, according to a published report.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)

Which of these car companies will continue to operate in one form or another?
  • General Motors
  • Chrysler
  • Both
  • Neither

NEW YORK (CNNMoney.com) -- Government regulators have told Bank of America Corp. and Citigroup Inc. that the banks need to increase their capital reserves based on preliminary "stress test" results, according to a report published Tuesday.

The capital shortfall at Bank of America could amount to billions of dollars, the Wall Street Journal said, citing people familiar with the situation.

The newspaper said executives at both banks objected to the findings and are planning to respond with "detailed rebuttals."

The government conducted the so-called stress tests on 19 of the nation's biggest banks. The aim is to determine which banks are healthy enough to survive another financial shock and which will need additional government support.

According to the Journal, the findings suggest that government officials are using the stress tests to send a "tough message" to troubled banks.

Government officials said the banks directed to raise more capital shouldn't be viewed as insolvent, the Journal reported.

The additional capital is intended to cushion the banks against potential future losses should economic conditions worsen, and federal officials say they won't allow any of the top 19 banks to fail, according to the report.

Citi said in a written statement that it is prohibited from commenting on the test results until they are officially released. The results are tentatively scheduled to be made public on May 4.

Still, Citi said its "regulatory capital base is strong." It also restated its plan to conduct an exchange offer that it says will significantly improve its "tangible common ratios," or the ratio of tangible common equity to tangible assets.

"We continue to focus and make progress on reducing the assets on our balance sheet, reducing expenses and streamlining our business for future profitable growth," Citi said.

Shares of Bank of America (BAC, Fortune 500) fell 6% in Tuesday trading, while Citi (C, Fortune 500) was down 5%. To top of page

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
Some Converse copycats cost big bucks A few bargain brands got swept up in Chuck Taylor's net, but others cost a pretty penny. More
Urban infrastructure gets a second life Railroad beds become parks, power plants become aquariums and slaughterhouses are now art centers as an industrial past turns people-centric. More
Boomtown moms From working mothers raising their kids in RVs to stay-at-home moms who spend their days organizing events for the Oil Wives club, meet the moms of North Dakota's oil boom. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.