Morgan and Goldman Eye Equity: Analyst

Morgan Stanley and Goldman Sachs are the subject of speculation they may raise capital to take advantage of their recent stock price runs.
Publish date:

Updated from 9:51 a.m. EDT

Speculation is rife that

Morgan Stanley

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Goldman Sachs

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will tap the equity markets soon to take advantage of a run-up in their share prices.

"This is not being done defensively but rather offensively," writes Rochdale Securities analyst Richard Bove in a report Monday. In an interview with

, Bove pointed out that

JPMorgan Chase

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CEO Jamie Dimon and

Bank of America

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CEO Ken Lewis said they will not raise additional equity in


interviews on Friday.


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CEO Vikram Pandit also has said this in recent public statements, Bove says.

By contrast Goldman CEO Lloyd Blankfein said he wanted to wait until he heard back from regulators after much-anticipated "stress tests" being done on all the banks. Blankfein said he expects that process to be finished in the middle of April. Mack declined to answer the question, but Bove points out that last month in an interview with Charlie Rose, Mack stressed the importance of equity in building the business, and his view that banks such as Morgan Stanley need to be deleveraged.

" I think we're going to have more equity capital long term. I think we're going to have a stronger balance sheet than we've had and clearly we're going to have less leverage," Mack said, according to a transcript of the show.

Bove says, "From my perspective, he was saying that growth in the balance sheet needs to be matched by growth in equity."

A Morgan Stanley spokesman declined to comment and Goldman spokespeople had no immediate response to an email message.

Morgan Stanley shares recently were falling 8.3% to $22.33. Goldman shares were off 5.5% to $102.17.