(Updated with final stock price movements throughout).

NEW YORK (

TheStreet

) --

Citigroup

(C) - Get Report

was among the losers of the financial sector Friday, even after Bank of America-Merrill Lynch upgraded the bank's stock to buy from underperform.

In a research note Friday, BofA-Merrill analyst Guy Moszkowski said

Citigroup

appeared set to be stabilizing after recapitalizing itself with government aid. "With crisis largely past for Citi, we believe psychology on the company is changing," the firm wrote. BofA-Merrill also increased its stock price target for Citi to $5.75 from $2.50.

Despite the upgrade, Citi shares finished lower by 2 cents, or 0.5%, at $4.04. Among other losing bank stocks Friday,

JPMorgan Chase

(JPM) - Get Report

and

Goldman Sachs

(GS) - Get Report

each lost 1.1%,

Wells Fargo

(WFC) - Get Report

shed 0.5% and

Morgan Stanley

(MS) - Get Report

was off by 0.3%.

What the Fed? Citi Circle

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In a separate research note, BofA-Merrill also upgraded

Regions Financial

(RF) - Get Report

to buy from neutral, and the firm raised its stock price target to $7 from $4. Regions shares finished higher by 44 cents, or 8.5%, at $5.64.

Elsewhere,

Bank of America

(BAC) - Get Report

won a restraining order against

Colonial BancGroup

( CNB) to prevent the Alabama lender from selling or disposing of more than $1 billion in cash and loans.

On Thursday, BofA sued Colonial, which is currently under a federal criminal investigation for accounting irregularities, claiming Colonial is holding the $1 billion in cash and loans as a custodian for Ocala Funding.

Meanwhile, various published reports say

Colonial BancGroup

is set to be shut down by regulators Friday, with deposits acquired by

BB&T

(BBT) - Get Report

. The Federal Deposit Insurance Corp. is expected to take Colonial into receivership and selling its deposits and branches to BB&T, which is based in Winston-Salem, N.C.

FBR Capital Markets analyst Paul Miller said investors really need to know the details of the transaction and the extent of FDIC loss-sharing in order to determine how beneficial this transaction will be to BB&T.

"Specifically we need to know how much FDIC assistance will be involved,the how sizable the purchase accounting marks are, and whether BBT is going to support its capital levels through a capital raise," Miller said in a research note.

BofA shares climbed 39 cents, or 2.3%, to close at $17.39. Colonial BancGroup shares dropped 5 cents, or 11.9%, to 41 cents. BB&T, meanwhile, jumped $2.43, or 9.4%, to $28.23.

Also on the winning side,

Allied Irish Banks

(AIB)

shares jumped after

Dow Jones

reported that the

Royal Bank of Canada

(RY) - Get Report

is looking to buy a stake in the bank. The report said the Royal Bank of Canada has started discussions with Allied Irish Banks and the Irish government.

Allied Irish Banks added 51 cents, or 8.7%, to $6.40.

Among other analyst moves, FBR Capital Markets resumed coverage of

Zion Bancorp

(ZION) - Get Report

with a rating of market perform and a stock price target of $17. The firm said it expects near-term capital/liquidity concerns to create better buying opportunities for the stock over the next six months. Zion finished up by 9 cents, or 0.5%, at $16.95.

In other financial sector news, Treasury Secretary Timothy Geithner told

The Wall Street Journal

he doesn't think the financial system is reverting to past practice, adding that the Obama administration won't let that happen.

"The big banks are running with much less leverage now, much more conservative liquidity cushions, there's been a significant shrinking of their balance sheets, getting rid of bad assets and cleaning up," Geithner said, according to the

Journal

. "And the weakest parts of the system don't exist anymore."

-- Written by Robert Holmes in New York

.