US banks told to raise $75 billion in capital by November

08 May 2009

US regulators yesterday directed the country's 10 largest banks to infuse $75 billion in additional equity following a three-month stress test.

The much awaited results revealed that 10 of the 19 banks involved in the analysis will need more common equity. Together, the 19 firms hold two-thirds of the assets and half the loans in the US banking system.

Among the 10 banks that need more common equity, Bank of America Corp. needs the most - $33.9 billion. Wells Fargo & Co needs $13.7 billion, GMAC LLC $11.5 billion, Citigroup Inc. $5.5 billion, and Morgan Stanley $1.8 billion.

Regions Financial Corp. of Birmingham, Alaska, SunTrust Banks Inc of Atlanta, KeyCorp of Cleveland, Fifth Third Bancorp of Cincinnati, and PNC Financial Services Group Inc. of Pittsburgh are the remaining five which needs to infuse funds.

However, JPMorgan Chase, Goldman Sachs, American Express, insurer MetLife Inc, credit card companies Capital One Financial Corp. and American Express Co, and State Street are found to be stable.

In its overview of report published yesterday, the board of governors of the Federal Reserve System said, "During this period of heightened economic uncertainty, US federal banking supervisors believe that the largest US bank holding companies (BHCs) should have a capital buffer sufficient to withstand losses and allow them to meet the credit needs of their customers in a more severe recession than is anticipated.''