The US
- Nineteen banks will be viewed by the Fed and the Treasury to determine whether they can get through the recession.
- Initial rumblings suggest that seven banks needs to bolster their capital by USD 65 billion and six of them won't need any capital.
- The big five banks; JP Morgan, Wells Fargo, Goldman Sachs, Bank of New York Mellon and Morgan Stanley, all have a market cap between USD 30 billion to about USD 139 billion. With the exception of Wells Fargo that has a tier one ratio of about 8.3%, all of them have manage to shove up capital and now have a tier one ratio of more than 10% odd; the highest being 16.4% for Morgan Stanley. They have all received a fair bit of money from the TARP (Troubled Asset Relief Program) but now three of these top five banks possibly may not need any new capital, so that’s been one bit of a positive and a bit of a sentiment relief
- Wells Fargo only needs new capital of USD 13-15 billion. This is an addition to the USD 25 billion that they raised in the TARP money. So that was one bit of a so point and the other one is only Morgan Stanley; the second bank which is expected to need about USD 1.5 billion.
- Bank of America and all these banking stocks reacted positively in trade yesterday, despite the fact that Bank of America is expected to raise about USD 34 billion.
source: MC
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