Bank of America won’t have to cut its dividend or raise capital.
By Daniel at 13 June, 2008, 1:15 pm
US Bank Shrs Fall; More Div Cuts, Capital Increases Seen
US Bank Shrs Fall; More Div Cuts, Capital Increases Seen
Last Update: 6/13/2008 10:31:20 AM
NEW YORK (Dow Jones)–KeyCorp (KEY) likely won’t be alone in cutting its dividend
and raising capital, analysts at Goldman Sachs said Friday. They estimate there
is another $65 billion in capital raising coming at U.S. commercial banks.
The Goldman analysts picked out Regions Financial Corp. (RF), Fifth Third Bancorp
(FITB), Comerica Inc. (CMA), Bank of America Corp. (BAC) and SunTrust Banks Inc.
(STI) as banks that “screen poorly on capital strength,” based on a combination
of Tier 1 capital ratios and dividend payout ratios.
Shares of all five banks were down shortly after Friday’s market open, with
shares of Fifth Third under extra pressure due to a downgrade of the stock to
market perform at BMO Capital Markets, which also said Fifth Third was at risk of
raising capital. Fifth Third shares fell 10.6% to $13.14, and Regions Financial
fell 3.1% to $12.71 each.
Goldman Sachs said Fifth Third and Regions were most at risk of both a dividend
cut and capital raising. Comerica, SunTrust and Bank of America had offsetting
factors that might allow them to just cut their dividend and avoid capital
raising, the firm said.
A Bank of America spokesman declined to comment. Representatives of the other
four banks weren’t immediately available to comment. On Tuesday, Bank of America
Chief Executive Ken Lewis told analysts that, under what the bank views as the
most likely scenario, in which the U.S. avoids a severe recession, Bank of
America won’t have to cut its dividend or raise capital.
KeyCorp said Thursday it will cut its dividend in half and raise $1.5 billion in
capital after it was forced to take an accounting charge as the result of an
adverse court ruling.
-By Ed Welsch, Dow Jones Newswires; 201-938-5244; edward.welsch@dowjones.com
(END) Dow Jones Newswires
June 13, 2008 10:31 ET (14:31 GMT)
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