In the past two weeks, Bank of America Corp.'s Kenneth D. Lewis has survived rampant rumors of the bank's nationalization and his own demise, but his greatest challenges lie ahead.

To resuscitate his bank, Mr. Lewis must find a way to raise capital quickly without further diluting shareholders, observers say. And this, they contend, means B of A must shrink itself, just as the embattled Citigroup Inc. is doing, less than six weeks after the Charlotte company increased its heft with a $19.6 billion acquisition of Merrill Lynch & Co. Inc.

"Clearly, for the bank to survive and prosper, it has to become much smaller than it is now," Dmitri B. Papadimitriou, the president of the Jerome Levy Economics Institute at Bard College in Annandale-on-Hudson, N.Y., said in an interview.

Mr. Papadimitriou and others suggested that Mr. Lewis reduce the company's stakes in the foreign banks Banco Itau in Brazil and Grupo Financiero Santander Serfin in Mexico and further reduce its stake in China Construction Bank. Observers also suggested that the company consider selling BA merchant services, a processing unit born of its 2004 purchase of National Processing Co.

Divesting its minority stakes in foreign companies could raise $15 billion to $20 billion in nondilutive capital, according to Christopher G. Marshall, a former consumer banking executive at B of A who has also been the chief financial officer at Fifth Third Bancorp. B of A needs that capital to help it buy out the Treasury Department's $45 billion investment, Mr. Papadimitriou said.

The foreign bank stakes were obtained in the past five years. In January, B of A unloaded a roughly 2.5% stake in China Construction Bank for $2 billion, leaving its stake at 16.6%.

One thing that could stymie efforts to shed foreign bank stakes could be lockup provisions, said John Douglas, a lawyer who runs the global banking and financial services practice at Paul, Hastings, Janofsky & Walker LLP. Though the CCB share lockup was three years, he said, there is no general standard. B of A's quarterly filings do not offer guidance on possible lockup periods for the Banco Itau and Grupo Financiero stakes, and a spokesman for the $1.9 trillion-asset Charlotte company would not comment on any topic for this story.

Mr. Lewis, the banking giant's chairman, president, and chief executive, has been visible of late. He issued a memo to employees Monday, his second in as many weeks, promoting his efforts to maintain stability. "I spent most of last week doing my best to help move the business forward," he said. "At times like this, I find I can stay positive when I focus on the things that matter most to our company — our customers, clients, shareholders, communities, and all of you."

Those efforts have included the personal purchase of nearly $1 million of Bank of America stock and an interview with CNBC in which Mr. Lewis called speculation of the company's nationalization "absurd."

In a Feb. 2 memo to employees, Mr. Lewis said the company's board "unanimously endorsed our business model, strategic direction, and the team" at its regular meeting Jan. 28.

Though the company's shares have recovered from trading levels below $5 a share last week, they are off 83.5% since the Merrill deal was made in mid-September.

Not everyone believes B of A has reached the point where it must shed assets. "I'm not sure they are in that mode yet," Anthony Polini, an analyst at Raymond James Financial Inc., said in an interview. "If they can stem their losses and return to profitability, then the need to raise new capital is a moot point." Were the bank to sell stakes now, it would not get "top dollar in what would basically be a stressed-asset sale," he added.

Though the company may benefit from shrinking its reach, shrinkage is the last thing it needs when it comes to deposits. It must ensure there is not the least hint that money is walking out the door to its competitors, analysts said. Daniel Cardenas, an analyst at Howe Barnes Hoefer & Arnett in Chicago, said B of A's foothold is not as strong in that city as elsewhere and that it runs the risk of what he called "a walk on the bank" locally.

A recent entrant to the Chicago market, where it bought LaSalle Bank in 2007, B of A's commercial deposit base there is susceptible to efforts by companies like PrivateBancorp Inc. and other small companies that target middle-market business, Mr. Cardenas said.

B of A could also lose customers to JPMorgan Chase & Co., which remains one of the largest banking companies in Chicago and can offer all the services B of A does, said Mr. Marshall. "There is a risk of large corporate flight," he said.

The Chicago area supplied about 5.6% of Bank of America's deposit base at June 30, according to data issued last fall by the Federal Deposit Insurance Corp. The company has in the past been able to raise deposits quickly, as in a 10-day promotion in the third quarter that brought in $9 billion.

"Liquidity hasn't been an issue for them, and I don't think it will be," Mr. Polini said. "And hopefully we have put this talk of nationalization to bed."

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