Wednesday, August 24, 2011

Bank of America shares hit 2-year low

Bank of America's corporate headquarters in Charlotte, North Carolina

Source: Press TV

Bank of America Corporation (BAC) shares have dropped to an almost two-year low amid fears that it will need to boost its capital by about USD 50 billion to meet new global standards.

BAC shares closed 1.9 percent lower at USD 6.30 after falling as much as 6.4 percent at one point on Tuesday to their lowest level in two and a half years, Reuters reported.

The shares of the largest US bank have now lost nearly 53 percent since the beginning of this year, reducing its market cap by more than USD 70 billion.

The cost of insuring the bank's debt against default also spiked to record levels at one point.

The size of Bank of America presents a particular headache for regulators as it touches almost every aspect of the US financial system.

The largest US bank had been rescued by the US government in the financial crisis.

In 2008, a series of bank and insurance company failures triggered a financial crisis that effectively halted global credit markets.

In the same year, more public corporations had filed for bankruptcy in the United States than in all of 2007. The failures caused a crisis of confidence that made banks reluctant to lend money to anyone.

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