Stress test shows BankAm may need $34 billion to stabilise operations

07 May 2009

Bank of America (BofA) is expected to top the list of banks needing capital infusion when the US treasury announces its long awaited ''stress test'' results today. The bank, which took over beleaguered Merrill Lynch & Co last year (See: Bank of America buys Merrill Lynch), is expected to have urgently in need of $34 billion.

 The results of the tests for the top 19 US banks are due to be released at 5:00 pm in the US, after financial markets close, today.

The tests are a key element of the Obama administration's plan to stabilise banks and the US government has spent around three months conducting stress tests to determine their revenue, losses and capital needs.

Analysts expect that about 10 of the 19 banks being subject to stress-tests would need more capital.

These include Citigroup Inc, Wells Fargo & Co, Fifth Third Bancorp, GMAC LLC, KeyCorp, Regions Financial Corp and SunTrust Banks Inc.

Citigroup needs $5 billion, while GMAC LLC, the auto and mortgage lender, needs $11.5 billion, and Wells Fargo needs $15 billion, reports said.