Aug. 24 (Bloomberg) -- Meredith Whitney, the bank analyst
who correctly predicted Citigroup Inc.’s dividend cut three
years ago, said Bank of America Corp. has no urgent need to
raise capital.
“I don’t think that there’s a mad dash to raise capital
immediately,” Whitney said today in a radio interview on
“Bloomberg Surveillance” with Tom Keene and Ken Prewitt.
“They’re going to steadily raise capital over time.”
Bank of America has lost more than half its value on the
New York Stock Exchange this year as investors speculated the
bank will have to access the public markets for capital. Chief
Executive Officer Brian T. Moynihan, 51, has said repeatedly
that the company won’t need to issue shares to comply with new
international capital standards and to settle claims surrounding
defective mortgages. Bank of America has sold more than 20
assets or units since Moynihan took over last year.
Moynihan is “the right guy for the job,” said Whitney,
41, who started New York-based Meredith Whitney Advisory Group
LLC in 2009. Bank of America, based in Charlotte, North
Carolina, probably won’t need to raise capital in the public
markets, and shareholders should “hold on,” Whitney said.
Bank of America rose 3.3 percent to $6.51 on the New York
Stock Exchange at 9:34 a.m., the biggest gain on the 24-company
KBW Bank Index.
The shares may triple, according to Anthony Polini, an
analyst at Raymond James Financial Inc., who cited the bank's
"excellent" liquidity and flexible balance sheet in a note to
clients today. Polini didn't give a time frame.
who correctly predicted Citigroup Inc.’s dividend cut three
years ago, said Bank of America Corp. has no urgent need to
raise capital.
“I don’t think that there’s a mad dash to raise capital
immediately,” Whitney said today in a radio interview on
“Bloomberg Surveillance” with Tom Keene and Ken Prewitt.
“They’re going to steadily raise capital over time.”
Bank of America has lost more than half its value on the
New York Stock Exchange this year as investors speculated the
bank will have to access the public markets for capital. Chief
Executive Officer Brian T. Moynihan, 51, has said repeatedly
that the company won’t need to issue shares to comply with new
international capital standards and to settle claims surrounding
defective mortgages. Bank of America has sold more than 20
assets or units since Moynihan took over last year.
Moynihan is “the right guy for the job,” said Whitney,
41, who started New York-based Meredith Whitney Advisory Group
LLC in 2009. Bank of America, based in Charlotte, North
Carolina, probably won’t need to raise capital in the public
markets, and shareholders should “hold on,” Whitney said.
Bank of America rose 3.3 percent to $6.51 on the New York
Stock Exchange at 9:34 a.m., the biggest gain on the 24-company
KBW Bank Index.
The shares may triple, according to Anthony Polini, an
analyst at Raymond James Financial Inc., who cited the bank's
"excellent" liquidity and flexible balance sheet in a note to
clients today. Polini didn't give a time frame.
‘Crown Jewels’
Moynihan agreed to sell the bank’s Canadian card unit, with
$8.6 billion in loan balances, and plans to leave the U.K. and
Irish card markets, Bank of America said this month. The bank
has been forced to write down credit-card and mortgage units
acquired by Moynihan’s predecessor, Kenneth D. Lewis.
“They’re biting into the marrow of the institution to
raise capital,” Whitney said. “They’re selling some crown
jewels.”
Richard Bove, an analyst with Rochdale Securities, said
yesterday that Bank of America has sufficient capital. The
company has “so much cash on its balance sheet that it could
pay back all of its short-term debt and a big chunk of its long-
term debt,” he said.
Henry Blodget, the former Internet stock analyst turned
blogger, wrote yesterday on Business Insider that charges and
loan costs may force the bank to raise as much as $200 billion.
Bank of America said Blodget, who was banned for life from the
securities industry after regulatory inquiries into how analysts
touted stocks during the Internet boom, made “exaggerated and
unwarranted claims.”
Bank of America is going to focus on cutting expenses to
manage through a “protracted economic recovery,” Moynihan told
investors this month. The economy grew at a 1.3 percent annual
pace in the second quarter.
Moynihan plans to “continue to clean up the mortgage
issues” stemming from the 2008 takeover of Countrywide
Financial Corp. and “get our operating costs down across the
board,” he said this month.
$8.6 billion in loan balances, and plans to leave the U.K. and
Irish card markets, Bank of America said this month. The bank
has been forced to write down credit-card and mortgage units
acquired by Moynihan’s predecessor, Kenneth D. Lewis.
“They’re biting into the marrow of the institution to
raise capital,” Whitney said. “They’re selling some crown
jewels.”
Richard Bove, an analyst with Rochdale Securities, said
yesterday that Bank of America has sufficient capital. The
company has “so much cash on its balance sheet that it could
pay back all of its short-term debt and a big chunk of its long-
term debt,” he said.
Henry Blodget, the former Internet stock analyst turned
blogger, wrote yesterday on Business Insider that charges and
loan costs may force the bank to raise as much as $200 billion.
Bank of America said Blodget, who was banned for life from the
securities industry after regulatory inquiries into how analysts
touted stocks during the Internet boom, made “exaggerated and
unwarranted claims.”
Bank of America is going to focus on cutting expenses to
manage through a “protracted economic recovery,” Moynihan told
investors this month. The economy grew at a 1.3 percent annual
pace in the second quarter.
Moynihan plans to “continue to clean up the mortgage
issues” stemming from the 2008 takeover of Countrywide
Financial Corp. and “get our operating costs down across the
board,” he said this month.
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