BofA: Financial Winners and Losers
(
Updated with paragraph on Wells Fargo, final stock price movements throughout
.)
NEW YORK (
) --
Bank of America
(BAC) - Get Report
shares lost ground along with much of the financial sector Tuesday after reports it offered to repay part of the $45 billion in bailout money it received from the U.S. government under the Troubled Asset Relief Program.
The Wall Street Journal
reported that BofA would start with a repayment of the $20 billion of additional aid it received in January when the bank was hesitating in buying
Merrill Lynch
, which would put the bank in the category of TARP recipients like
Wells Fargo
(WFC) - Get Report
rather than "exceptional" aid recipients like
Citigroup
(C) - Get Report
.
The U.S. is also pushing for
to pay at least $500 million to end a tentative pact that would have had the government share the bank's losses on certain assets, the report said. Earlier, BofA had taken a stance against paying the fee to exit a loss-share agreement on Merrill assets.
Bank of America shares, which rose initially, sank $1.13, or 6.4%, to close at $16.46. Among other names, Citigroup fell 9.2% to $4.54, Wells Fargo lost 4.8% to finish at $26.21, and
JPMorgan Chase
(JPM) - Get Report
slid 4.1% to $41.67.
Wells Fargo's decline came after a late-day report from
Bloomberg
said CEO John Stumpf asserted that the bank won't raise equity to pay back TARP, and that it will pay back TARP soon.
In other bank news, the
Journal
reported separately that
UBS
(UBS) - Get Report
plans to start issuing covered bonds, marking the first time a Swiss bank is using this financial instrument, which allows it to secure funding at attractive terms. The covered bondholders will receive interest and redemption payments from UBS' London branch, the report said. UBS shares shed $1.30, or 7.1%, to $17.02.
(CIT) - Get Report
shares were also on the decline on word the troubled lender will postpone interest payments on bonds maturing in 2067, according to a regulatory filing the lender made Tuesday.
In the filing with the
Securities and Exchange Commission
, CIT Group said it will defer an interest payment on junior notes scheduled for payment on Sept. 15. The bonds represent just a small fraction of more than $60 billion in debt obligations held by CIT, which has been struggling to stay out of bankruptcy. CIT shares dropped 27 cents, or 15.5%, to $1.47.
Turning to analyst actions, Bernstein downgraded
American International Group
(AIG) - Get Report
to underperform from market perform, with a stock price target of $10. The firm cited valuation for the ratings change, as fundamentals for the stock have not changed in recent weeks. AIG shares plummeted $9.33, or 20.6%, to end the day at $36.
Among other high-beta financial stocks,
Fannie Mae
(FNM)
and
Freddie Mac
(FRE)
shares lost ground despite stronger-than-expected data on pending U.S. home sales.
Earlier, the National Association of Realtors said its pending home sales index for July rose 3.2% to a reading of 97.6, the sixth straight increase and the highest level in more than two years. Economists had bee looking for a reading of 96.5. Still, Fannie Mae shares finished down 17.6% at $1.59, and Freddie Mac lost 17% to $1.90.
In other bank-related news,
The Wall Street Journal
reported that Kenneth Feinberg, the Treasury Department's special master for compensation, triggered a 60-day clock to rule on pay packages at seven firms receiving significant amounts of federal rescue funds, but he is expected to decide well ahead of that deadline, according to government officials.
The report said Feinberg's judgment will affect compensation for the top 25 earners at Citigroup, BofA, AIG,
Chrysler
,
General Motors
, Chrysler Financial and GMAC Financial.
-- Written by Robert Holmes in New York
.
