…official leaks now suggesting that up to 10 may need more capital.

Photo by klynslis

Photo by klynslis

US financials led the global sector rebound when Citibank and other banks said they were profitable.  Then came the change in FASB rules for mark to market for bank assets and finally the bank profits which reflected some creative accounting.

For this “baby bull” – for want of a better term, rally to be sustained, the much awaited Fed stress tests of 19 US banks should reveal no negative surprises.  My sense is that the delay in release of the test results by two days because the findings are apparently being disputed by some banks could signal its more negative than expected.  Latest wire reports from informed sources now suggests that 10 of 19 banks need more capital and included in this list would be the likes of CitiGroup, Bank of America, Wells Fargo and even JP Morgan.   This may not augur well for their stock prices because of the dilutive effect fund raising from placements or rights issue can have on their stock prices. Read more…