Financial Winners and Losers: BofA

Bank stocks rallied on varying reports of what the government's stress tests will show about capital levels at several financial institutions.

Author:: Robert Holmes
Publish date:: May 6, 2009 5:13 PM EDT

Updated from 2:23 p.m. EDT

Bank stocks rallied Wednesday, one day ahead of the official results of the government's stress tests, on several leaked reports about the capital levels of different financial institutions.

Bank of America

(BAC) - Get Report

shares slid in the premarket session following reports that the government told the bank it would need up to $34 billion in capital, a far greater number than the $10 billion number thrown around earlier in the week.

However, shares rebounded and finished higher by more than 17.1% as ADP said April job losses were less than expected, mitigating the impact of the stress test, and investors figured out that the bank had options for meeting the requirement anyway, including converting the government's $45 billion investment of preferred shares into common stock.

Meanwhile, several media reports citing people briefed on the results on the stress tests results said that

Citigroup

would need to raise $5 billion, less than the $10-billion figure thrown around earlier in the week. Citigroup rallied 16.6% to $3.86.

Late in the afternoon,

Bloomberg

reported that

GMAC

, the financing arm of

General Motors

(GM) - Get Report

is in need of $11.5 billion, and

Wells Fargo

(WFC) - Get Report

needs $15 billion.

GM fell 10.3%, while Wells Fargo shares jumped 15.6%.

The same report said that

Goldman Sachs

(GS) - Get Report

Morgan Stanley

(MS) - Get Report

MetLife

(MET) - Get Report

JPMorgan Chase

(JPM) - Get Report

American Express

(AXP) - Get Report

and

Bank of New York Mellon

(BK) - Get Report

do not need any additional funds.

The Wall Street Journal

reported separately that

Regions Financial

(RF) - Get Report

was told by the government to raise additional funds. The stock finished higher by 6.2%.

The official results of the government's stress tests are expected after the close of trading Thursday, with several banks holding conference calls later in the day.

Goldman rose 3%, Morgan shares added 4.8%, MetLife surged 16.7%, JPMorgan climbed 6.9%, Bank of New York Mellon shares rallied 11.1%, and American Express rose 2.2%.

Elsewhere,

The Wall Street Journal

and

Reuters

reported that U.S. officials are set to

reveal guidelines for how banks can repay funds

from the Troubled Asset Relief Program, or TARP.

Several banks that are undergoing stress tests have said they quickly want to repay funds under the TARP program, in part to prove their financial health, but also to escape from tough rules governing executive pay, dividend payments and stock repurchases, according to the reports.

Capital One

(COF) - Get Report

was among the companies benefiting from a Goldman Sachs upgrade of the debt rating for the U.S. banking sector to attractive from neutral.

Goldman upped its view on Bank of America's debt rating to outperform and cut its rating on Morgan Stanley to in-line from outperform. Capital One, though, surged 15% to close at $22.39 after Goldman boosted its debt rating to outperform.