BofA rises 11% in trading as investors speculate the lender can meet U.S. demands for capital

[Amerigo Vespucci]

Bank of America Rises on Prospect of Meeting Capital Target

By David Mildenberg and Rebecca Christie

May 6 (Bloomberg) -- Bank of America Corp. rose 11 percent in New York trading as investors speculated the lender can meet U.S. demands for capital by selling assets or converting the government’s preferred stake into common shares.

The lender advanced $1.15 to $11.99 in 9:58 a.m. New York Stock Exchange composite trading. Regulators have concluded the Charlotte, North Carolina-based bank requires about $34 billion in capital to withstand a weaker economy, said a person with knowledge of the matter.

Chief Executive Officer Kenneth Lewis has promised investors the bank will recover from the recession without a third injection of U.S. funds, which total $45 billion. Shareholders ousted Lewis as chairman at last month’s annual meeting, which included calls from CtW Investment Group for him to quit entirely. Lewis may be able to close the capital gap by selling units, said Michael Nix of Greenwood Capital Associates.

“The easiest thing for them to do would be to convert the preferred shares into common, but they also must be asking, ‘Do we sell BlackRock or U.S. Trust or Columbia or some of our Chinese bank stock?’ ” said Nix, a senior portfolio manager at the Greenwood, South Carolina firm. He said Greenwood sold about half its 150,000 Bank of America shares yesterday.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aJUGYED15DtI&refer=home

[NeedleCast]

1. Good, I bought them about six weeks ago along with Citigroup

I figured if the Feds are going to keep throwing money at them, I might as well see a return on the fact that they're getting my tax money.