Investors distrust in banks dragged shares of Bank of America (BofA) to the lowest level since March 2009 earlier this week, investors reacting to the fears that the credit institution would have to raise additional capital, writes The Financial Times.
Goldman Sachs (NYSE:GS) is also faced with a reduction in its shares, down by almost 5% earlier this week to the minimum of the last 12 months, after it was learned that the CEO of the world’s largest investment bank has hired a major lawyer specializing in criminal cases, according to The Telegraph.
BofA (NYSE:BAC) shares fell 8% to $6.30, half the value recorded at the beginning of the year.
The bank is under pressure to demonstrate that it can cope with a slowing U.S. economy that could erode further the value of its mortgage-based portfolio.
Analysts were expecting for the credit institution to get up to $20 billion from the sale of its 10% stake in China Construction Bank CCB.
But Zhang Jianguo, president of CCB, said that BofA agreed to keep at least half of the 10% package.
Last week, BofA has consolidated its capital by selling the Canadian division of credit cards for $8.5 billion to TD Bank and committed to sell more cards portfolio in the UK and Ireland.
Concerning to investors is the bank failure in reaching an agreement with the U.S. government on the federal investigation regarding the enforcement practices of the bank.
In July, in an attempt to allay fears of investors about the need to attract additional capital, BofA has provided more information about its plans to meet capital requirements Basel III, after the bank reported a net loss of $8.8 billion in the second quarter.
At that time, the bank’s CEO, Brian Moynihan, said the bank felt no pressure to attract additional capital, the costs of mortgages putting in shade the “solid performance” of the bank’s operations, according to him.
Recently, BofA said that it would eliminate 3,500 jobs in the second quarter in a restructuring plan, according to BBC News.
According to The World Street Journal and The New York Times, layoffs at the largest U.S. bank by assets could exceed 10,000 in the coming months.