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NEW YORK (
Bank of America(BAC - Get Report) efforts to build its capital cushion for regulatory purposes remain on track and drove outperformance of Bank of America shares last week, according to a report published Monday by Wells Fargo.
Bank of America announced last week
it would sell a $6.6 billion stake in China Construction Bank. Bank of America also issued $2.1 billion in common stock to retire preferred and trust-preferred shares worth $2.7 billion.
Both moves are aimed at helping Bank of America achieve management's 6.75-7% Basel 3 Tier-1 common capital targets by the end of 2012, according to Wells Fargo analyst Matt Burnell. Burnell estimates the moves could improve Bank of America's tier 1 capital by 0.38%, with an additional 0.13% if the bank can sell its European credit card business. However, Burnell argues a sale would be a "stretch goal in this environment." Still, he expects Bank of America to achieve its tier 1 targets "through continued rationalization," he wrote.
Bank of America shares fell 6.9% last week compared to an 8% decline in shares of
JPMorgan Chase(JPM - Get Report), a 10.4% drop at
Citigroup(C - Get Report), a 9.6% fall at
Goldman Sachs(GS - Get Report) and a 13.1% fall in
Morgan Stanley(MS - Get Report)shares over the same period.
Wells Fargo(WFC - Get Report), however was the clear outperformer among U.S. financial giants, losing just 3% last week.
Results as of mid-Monday were a bit mixed, however, with both Goldman and JPMorgan narrowly outperforming Bank of America, though share price declines at all those banks hovered around 3%, Morgan Stanley and Citigroup were the poorest performers by a significant margin, down 6.3% and 5.4%, respectively.
Written by Dan Freed in New York.
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