WORLD> America
US banks rush to raise capital
(Agencies)
Updated: 2009-05-09 22:14

In addition to offering shares, Bank of America plans to sell assets to satisfy regulators. The bank is better able to raise capital than the government estimated in its tests, Chief Executive Kenneth Lewis told CNBC television on Friday.

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Bank of America sold $3 billion of non-government guaranteed debt maturing in five years, a key condition for banks looking to pay back money they received under the Troubled Asset Relief Program.

Banks are keen to get out from TARP, in part because of pay restrictions for banks in the program. The government plans to soon detail the specifics of how the pay restrictions work, according to a document obtained by Reuters on Friday.

Leaving TARP may be more difficult than banks think, but the interest in returning government money reflects bank optimism that the worst may have passed in financial markets.

Bank of America's Lewis was upbeat on the economy, saying on CNBC he still expects to see signs of a turnaround in the second half of the year.

Goldman CEO Lloyd Blankfein said at the bank's annual meeting on Friday that the end to the crisis "is in sight" and markets are "cheerier."

Hours before Blankfein's observation, the US Department of Labor reported that unemployment rose to 8.9 percent, the highest since September 1983.

Bad debts

Banks globally remain under pressure as rising unemployment and sinking house prices drive loan losses.

In Europe, top banks continued to show the impact of the recession as companies and consumers are increasingly running into trouble.

Royal Bank of Scotland, now 70 percent state-owned, fell to a loss in the first three months of 2009 after bad debts quadrupled to 2.9 billion pounds and it took a 2.1 billion pound writedown on risky assets.

"(We expect) a slowdown in financial market activity compared with the very buoyant conditions seen in Q1," Chief Executive Stephen Hester said.

Meanwhile, Germany's Commerzbank reported an 861 million euro ($1.2 billion) loss for the quarter, after a 1.2 billion euro charge from the investment bank and a 54 million euro charge from its commercial real estate unit.

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