Bank stocks fell on news that Bank of America Corp. might have to raise an additional $45 billion in capital to satisfy a government demand.
The KBW Bank Index fell 4.09%, in large part because of an assertion by Rochdale Securities analyst Richard Bove in a note Friday that B of A would have to raise $45 billion in a new capital offering before the government would let the company redeem its preferred shares from the Troubled Asset Relief Program. Such a move would "meaningfully harm" existing shareholders, Bove wrote. B of A's shares fell 5.1%.
Bove also downgraded his ratings on SunTrust Banks Inc. and Fifth Third Bancorp from "neutral" to "sell," and on U.S. Bancorp from "buy" to "neutral." SunTrust fell 5.4%; Fifth Third, 7.9%, and U.S. Bancorp, 3.2%.
Other decliners included JPMorgan Chase & Co., off 3.1%; Wells Fargo & Co., 3%; PNC Financial Services Group Inc., 3.2%, and Citigroup Inc., 19 cents a share, to $4.27.
Among the regional banking companies, BB&T Corp. lost 2.2%; Capital One Financial Corp., 3.6%; Regions Financial Corp., 7.8%; Comerica Inc., 3.2%; Marshall & Ilsley Corp., 7%; M&T Bank Corp., 1.2%, and Zions Bancorp., 7%.
Synovus Financial Corp.'s shares fell 43 cents, to $2.49, on an analyst downgrading and despite two upgrades.
The Dow Jones industrial average lost 1.05%, and the Standard & Poor's 500 index, 1.17%.