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Citigroup and Bank of America need more funds to cover losses

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by Kay Mitchell

There are suggestions that the financial turmoil is still in full swing after US banking giants, Citigroup and Bank of America, have been instructed to raise billions of dollars of extra capital to cover future losses, according to the Wall Street Journal.

The findings were uncovered following US Government stress tests on both banks, carried out to establish which financial institutions are in a position to weather the downturn.

The Federal Reserve will release the results of the stress tests on 19 banks in early May.

The announcement had an impact on shares with Asia hit and European markets were down. In London, the FTSE 100 index lost nearly 70 points within minutes of opening, with banks suffering the most.

However, the swine flu outbreak is also having a major impact on stockmarkets worldwide with travel companies and airlines hit.

Returning to the US banks, the majority of them have been announcing strong first quarterly profits with Bank of America declaring its acquisitions of Merrill Lynch and Countrywide Financial Corp. had contributed “outstanding performances” and are driving profit at the bank.

Meanwhile, Citigroup recently announced its first quarterly net profit in almost two years after making a profit of $1.6 billion (£1.1 billion) for the first three months of 2009, compared to a loss of $5.1 billion in the last three months of last year.

Citigroup has already received $45 billion from the US Government, while Bank of America has received $20 billion.

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News posted: April 28, 2009

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1 Comment

  1. With big American banks in need of a cash injection, we’re obviously no where near the upswing out of this mess…

    Comment by moneymouth77 — May 8, 2009 @ 2:13 pm

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