US banks still require billions of dollars in funding
Despite rumours that the US banking sector has as a whole escaped relatively unscathed from ongoing stress tests, it would appear that a number of high-profile banks will need significant capital in the short term. The American authorities have given these banks up to one month to raise the additional funding required after a constant drip feed of information to the markets. The aim of drip feeding information to the markets is to ready investors for imminent cash calls and allow an adjustment in various share prices.
Bank of America is expected to be one of the largest casualties with suggestions that $34 billion in additional funding is required to bring capital adequacy levels up to acceptable levels. The likes of Wells Fargo appear in-line for a $15 billion cash call, Citigroup a $5 billion cash call and General Motors is in need of around $11.5 billion. There are a number of other companies also requiring capital which will no doubt inject some confusion and disappointment into the US stock market.
How ironic that recent rumours were suggesting that the US banking sector was fairly strong after the initial round of government funding. It would appear that now is the time for investors to step forward and take up the slack in the US banking sector.
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