At least six large US banks need more capital

At least six large US banks need more capital New York - At least six of the 19 largest US banks need more capital to remain healthy through the recession, according to leaked information from the two-month stress test carried out by the nation's bank regulators, Bloomberg financial news service reported Wednesday.

The infusions could come from extra cash injections from the government, but more likely from converting preferred shares to common equity, the report said, citing people close to the situation.

Last Friday, regulators gave private briefings to the 19 banks - all of them with more than 100 billion dollars in assets - about the results of the two-month review of their financial health. The results won't be released to the public until Monday.

The firms include JPMorgan Chase & Co, Wells Fargo & Co., Bank of America and Citigroup.

Under the plan, banks which are found short of capital could be forced to sell ownership stakes to the US government. The delay until Monday gave banks time to challenge the results. Bloomberg reported that appeals have been filed by Citigroup Inc. and Bank of America Corp.

Seeking to reassure nervous investors, the Federal Reserve said last week that most US banks have capital levels ""well in excess of the amounts required to be well capitalized."

But it noted that there was "heightened uncertainty" about the future course of the US economy and it was prudent for large banks "to hold additional capital to provide a buffer against higher losses than generally expected."

Regulators are looking for banks to have enough capital for the next two years to keep credit lines flowing.

The test has caused jitters among investors over fears the programme could end up with the government nationalizing banks. Banks are also resisting suggestions that the government could limit managers' salaries and bonusses, even as public outcry grows over bonusses paid out of government bail-out money last year.

Both the US government and the Federal Reserve have pumped unprecedented hundreds of billions of dollars into struggling US banks as they try to keep their heads above a flood of failed mortgages. (dpa)

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