Citi, BofA and Wells Fargo Need Capital

Updated from 5:21 a.m. EDT

Bank of America (BAC), Wells Fargo (WFC) and Citigroup (C) shares sailed higher on Monday, despite reports that the three banks will need to raise new capital to pass government stress tests.

BofA recently were gaining nearly 4.6% at $9.10, Wells was adding almost 7.7% at $21.11, and Citi was up 4.5% at $3.10 amid a broad market rally.

The Financial Times reported on Monday that BofA, as well as troubled competitor Citigroup, are each working to raise $10 billion in fresh capital to plug in balance-sheet gaps determined by regulators. The Associated Press reported later in the day that Wells would need fresh funds as well, though no specific amount was cited. Those reports, as well as others regarding capital shortfalls by the Wall Street Journal and Bloomberg on Monday and last week all cited anonymous sources.

Bank of America strongly asserted on Monday that at least one publication got the story wrong.

"The Financial Times report is completely inaccurate," says spokesman Scott Silvestri. "Bank of America has not been given a final number by the Federal Reserve and the bank is not actively raising $10 billion in capital."

Citi spokesman Jon Diat said "we are not commenting on rumors and speculation." A Wells Fargo spokeswoman also said that firm would not comment on capital concerns.

BofA has been working to beat back a raft of speculation about management changes, a supposed capital shortfall and a failing grade on the government's stress test.

CEO Ken Lewis lost his chairman title as the result of a shareholder vote last week, leading to speculation that the board may be working to replace him, despite its statements of unanimous support.