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Banking, finance, and taxes

Does Bank Of America (BAC) Need $10 Billion In New Capital?

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By Douglas A. McIntyre Published
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KBW, the bank research firms, thinks Bank of America (BAC) will have to raise $10 billion in new capital. Its mix of real estate, LBO, business, and consumer credit debt still faces substantial write-downs.

The figure is part of a report from KBW that says American money center and regional banks will have to come up with $30 billion to make their balance sheets right. According to the AP, "Among the banks reviewed by KBW, 10 are large-capitalization banks that would account for $21 billion in capital necessary to cover potential losses."

For BAC, which is already trading poorly in the market due to general malaise in the bank industry and its ill-advised purchase of Countrywide (CFC), the dilution from raising $10 billion would be close to 15%.

That could take its stock from $23, near a 52-week low, to $18. And, that is if there is no other bad news.

Douglas A. McIntyre

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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