Banks
Merrill Turns Away Private-Equity Offer
04/25/08 - 01:41 PM EDT
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Shares of Merrill recently were up fractionally to $48.43. Analysts say that many more banks, including possibly Bank of America(BAC - Cramer's Take - Stockpickr), will need to raise capital this year. Citi in January slashed its dividend and raised $12.5 billion in convertible preferred securities as writedowns and ballooning loan losses severely crimp the financial titan. About half of this amount, or $6.88 billion, was purchased by the Government of Singapore Investment Corp. Other investors included the Kuwait Investment Authority, former Chairman and CEO Sandy Weill and his foundation, and long-time investor Prince Alwaleed bin Talal. Additionally, Citi in late November sold $7.5 billion of equity units to the Abu Dhabi Investment authority and issued additional debt securities during the fourth quarter providing $4.3 billion in capital. Wachovia said last week that it planned to raise $7 billion through a common stock offering.
The savings and loan's first-quarter loss and deteriorating loan base could cause it to join the growing ranks of banks raising capital.
As first-quarter earnings season for banks and brokerages like Credit Suisse come to a close, investors increasingly seem to be calling poor results a bottom. Not so fast, some analysts say.
The firm's move is intended to address shareholders' demand for accountability at financial companies hit hard by the credit crisis.
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