Banking, finance, and taxes
Bank Of America (BAC) Fights Oppenheimer Over Need For Money
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Bank of America (BAC) CEO Ken Lewis has based what is left of his reputation on the fact that the firm does not need another dime in government money. As a matter of fact, he regrets taking as much TARP cash as he did.
Oppenheimer believes that the bank will need $36.6 billion. In this environment, that money is not going to come from the private sector. The only entity with the stones to put it up is the US government.
According to Bloomberg , “Bank of America Corp., the largest U.S. bank, needs to raise $36.6 billion in equity to bring capital ratios in line with its peers, according to Oppenheimer & Co.”
While the money may not come in exchange for common stock, any instrument is likely to have some conversion provisions, which means that dilution is possible. With a market cap of $44 billion, current Bank of America shareholders will be facing a large haircut if Oppenheimer is right. The stock trades at $7.
Douglas A. McIntyre
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