What is BofA (BAC) Management Waiting For?
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Bank of America Corp. (NYSE: BAC) shares are about 1.7 percent better on Friday's session following reports the company is mulling further asset sales.
Stop us if you've heard this one before...
According to Reuters, the sales may come as BofA looks to firm up its capital structure to meet new federal regulations.
Since January 2010, just about when CEO Brian Moynihan took the helm, BofA begin selling, and has sold off more than $50 billion in assets since. One has to wonder what else BofA has to give.
Reuters notes U.S. banks will have until 2019 to fully comply with new rules. Confident competitors like J.P. Morgan (NYSE: JPM), Citigroup (NYSE: C), and Wells Fargo (NYSE: WFC) have signaled the ability to meet new requirements over the next year or two.
So there sits BofA. More than $100 billion of market cap wiped clean, sorting out the Countrywide mess, European exposure, and investors losing confidence in management. Unlike peers, Brian Moynihan has only murmured that BofA will be exceed 2012 rules when they come into effect, and hasn't dropped word about 2019 yet.
One analyst from Guggenheim said BofA might need $45 billion or more in new capital, which it may be able to accumulate through earnings -- four years of earnings, to be exact. Others have echoed a management shake-up, or even piecing out the firm.
And basically nothing but bad news has come from BofA over the last two years, leaving analysts to wonder whether the Board still thinks its a cyclical issue, or something more.
It's not all Moynihan's fault; in 2008 BofA paid $2.5 billion for Countrywide, which has brought about $30 billion in losses from bad loans and other debt, not to mention litigation fees.
With legendary investor Warren Buffett making a $5 billion capital infusion over the summer, however, and BofA entering a 400 million equity swap to further boost capital, the time has never been more critical for BofA to take more drastic steps before shares continue to slide into "penny stock" territory.
Because that just wouldn't be American.
Stop us if you've heard this one before...
According to Reuters, the sales may come as BofA looks to firm up its capital structure to meet new federal regulations.
Since January 2010, just about when CEO Brian Moynihan took the helm, BofA begin selling, and has sold off more than $50 billion in assets since. One has to wonder what else BofA has to give.
Reuters notes U.S. banks will have until 2019 to fully comply with new rules. Confident competitors like J.P. Morgan (NYSE: JPM), Citigroup (NYSE: C), and Wells Fargo (NYSE: WFC) have signaled the ability to meet new requirements over the next year or two.
So there sits BofA. More than $100 billion of market cap wiped clean, sorting out the Countrywide mess, European exposure, and investors losing confidence in management. Unlike peers, Brian Moynihan has only murmured that BofA will be exceed 2012 rules when they come into effect, and hasn't dropped word about 2019 yet.
One analyst from Guggenheim said BofA might need $45 billion or more in new capital, which it may be able to accumulate through earnings -- four years of earnings, to be exact. Others have echoed a management shake-up, or even piecing out the firm.
And basically nothing but bad news has come from BofA over the last two years, leaving analysts to wonder whether the Board still thinks its a cyclical issue, or something more.
It's not all Moynihan's fault; in 2008 BofA paid $2.5 billion for Countrywide, which has brought about $30 billion in losses from bad loans and other debt, not to mention litigation fees.
With legendary investor Warren Buffett making a $5 billion capital infusion over the summer, however, and BofA entering a 400 million equity swap to further boost capital, the time has never been more critical for BofA to take more drastic steps before shares continue to slide into "penny stock" territory.
Because that just wouldn't be American.
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